Creating your own death spreadsheet part 2 – net worth tracking

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So… once you have the total cost of your expenses nutted out and indexed for the rest of your life, you come to the part where you need to calculate the income required to meet those expenses. I’ve written about the income my family will need in retirement here but another important part of the equation is to keep track of your net worth – particularly for future planning – and not just the income producing assets. For example, our home is worth nearly $1m, makes up about one third of our net worth and while it doesn’t produce any income right now, it is important for us to keep track of the value in case our circumstances change and we are required to think about how to better deploy that capital for our financial needs.

What is net worth? In my head, net worth is your family assets minus liabilities. Prior to getting serious on our financial future, our net worth would have been barely in the black territory – closer to zero, more like it- as we had a mortgage of $350k. But after some serious knuckling down, some employment payouts and some granularity on the value of my husband’s superannuation pension, our net worth is tracking quite well for our early retirement.

Some net worth trackers out there include the family home; others exclude it. I like to think of the family home as part of the potential income earning asset pool, because you can create ways to use it, like Air BNB, hosting a student; or downsizing later for less and using a smaller capital pool to generate income.

As I share these numbers and the calculation methods, it is not lost on me that my family and I are in an incredibly privileged position. We are both educated. My parents started off in financial dire straits but slowly built some wealth over time (they showed me how to do it, really). My husband’s parents were educated and had successful careers. Both of us were fortunate enough to go to university and have had reasonably successful careers, living in the highest income per capita city in Australia. Jobs are plentiful here. Even though we have both been through redundancies at various times, we have enjoyed a short break and found work within a few months, without any financial losses.

But once again, I find the financial independence numbers for an Australian context hard to find out there in web-land, so I put ours out there to start filling the void. I hope others are prepared to do so too, so we can build a context rich picture for other aspiring financially independent people out there.

We paid down our mortgage following the year of austerity and have no other forms of debt, so I’ll be reporting on our assets only. I use an app called Wealth+ and manually enter the numbers each little while. The numbers fluctuate because we invest the share market; our house increased in value by $50k during the year and we got a closer idea of the value of my husband’s superannuation which boosted our assets significantly. He has a defined benefits scheme and we previously valued it based on his annual statements. Now we have moved the fund to cash and have received a pension estimate from the fund, we have valued his super at 25 x the annual net pension, assuming he lives until he is 80 and draws down from age 55.

So here are the screen shots of the app. We started tracking our net worth on the app in February with a commencing value of $3.423m. As at 28 July, our net worth is valued at approximately $3.545m.

net worth 2

net worth 1

The categories I track are below:

net worth categories

I love watching our progress. Investing and saving can be hard if you can’t see the gains. Knowing our net worth has increased by nearly $120k since I started tracking this February is so motivating and really exciting to show my far-less-interested husband (giggle!) about the progress we have made this year.

Do you calculate your net worth? What method do you use? How do you find it compares to the US versions of FIRE?

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