January is typically a time when we purge ourselves from the gluttony of the holidays and refocus on our health and wellbeing. After a particularly difficult year, I am sure many of us are paying even more attention to our mental, emotional, and physical health.
Inflation is probably not a metric you regularly keep an eye on but we can all reflect on times when the prices of goods were notably much lower than today. While my parents were probably grumbling at a $1.00 price tag at the gas pump during the 90’s, I was topping off my tank anywhere that offered less than $4.00 a gallon in California.
Many of us have a complicated relationship with debt. It’s something we’re afraid of getting too deep into yet in many cases, a necessity to afford large purchases or achieve certain milestones. Some of us will do everything in our power to get and stay out of debt. Others may lean on this route more than they should.
Inventor and futurist, Ray Kurzweil, once observed that people are, well . . . pretty bad at predicting the future. Why? Because we tend to see the world in a linear fashion. As he puts it, “The future is widely misunderstood. Our forebears expected it to be pretty much like their present, which had been pretty much like their past.”
Prior to the global pandemic that ensued from COVID-19, I began a series about maximizing net worth. While you may feel like you are in survival mode instead of raising the bar with your finances, the same principles apply to manage your money. Getting organized, knowing what drives your overall wealth, and identifying fluctuations in these underlying forces provides a strong foundation for financial sustainability. But merely familiarizing yourself with your financial picture is only half the battle. You need to decide the appropriate times to make a change or take action.
If you have been following along on my blog, you know by now that I am a big proponent of tracking net worth as the basis of managing your money. Once you familiarize yourself with your net worth figure and underlying assets, you may be wondering if there is anything you should be doing differently. When it comes to managing money, you want to make sure every last dollar is working for you optimally.
When I was an Analyst at an online marketing company, one of my responsibilities was to manage the performance of our clients’ advertising campaigns. If the performance of a campaign started deviating from its goal, it was my job to figure out why. Preferably before my client came knocking on my door!
If you are just getting started on your personal finance journey or looking for a better way to manage your money, one of the first places to start is tracking your net worth. Net worth accounts for all of the financial assets and liabilities you own, providing an overall picture of your current financial standing.