I caught myself blurting something out the other day while on a podcast:
“Net Worth is the new budgeting”
I don’t know where it came from as I’ve never said that before – or even thought it? – but once it came out I started racking my brain for a list of comparisons to see how right or not I was ;)
- Does tracking your net worth hold you accountable like budgeting? (Yup)
- Does it keep you motivated and more conscious about your spending like budgeting? (Yup)
- Is it faster and easier and have approximately 1,000x better shot of you not burning out later? (Yup, yup, YUP! Haha…)
It’s also great because it gives you a better *overall* picture of your finances too, rather than just concentrating on cash flow which is only one side of the equation (albeit an important one).
On the other hand, if you only focus on your net worth you miss out on a handful of great budgeting benefits as well!
- Knowing the ins and outs of your income and expenses
- Being able to pinpoint trouble areas in your daily spending
- Not thinking you’re hot $hit when the market rises and your net worth doubles!
- Not thinking you’re a hot MESS when the market crashes and your net worth gets cut in half ;)
- And of course, having more #’s to play along with if you’re a big ol’ fiscal nerd
So pros and cons with both, but an interesting thing to consider… Particularly for those who’ve failed at budgeting time and again and are looking for something to stick!
Because I’ll tell you this much – you have a MUCH better shot at keeping something up that only requires your attention *one time* a month for 15 minutes than you do each and every day, haha…
And that’s not even incorporating the *emotional* wins that come with taking control of your finances either. Because while you’re technically only tracking your numbers once a month, it still very much seeps into your consciousness and affects your daily activities/spending for the better as well.
There’s a reason we share our net worth here month after month after month – it does wonders!! For both your mind and your money! And is why you’re about to be hit with our latest net worth installment too in a few days, haha… #123 in a row, baby! Haven’t missed a month yet!
But I’m definitely not here to convince you that your net worth is more important than your budget, especially with budgeting literally being in my blog name ;)
I do think it could be a great alternative though if you’re currently stuck and feeling pretty bad about your budgeting fails. With net worth all you have to do is copy and paste over some numbers – and voila!
It was one of the first things I used to do with my money coaching clients and boy did it open up a world of enlightenment… They loved being able to see everything in one spot and only have a *single number* to compare each month instead of a million ones with budgeting… Here’s the simple spreadsheet I gave them, which also included a section for income and expenses which we tackled later: The “Money Snapshot” spreadsheet
In a perfect world, though, doing your net worth AND budgeting would be best, of course. It gives you the ultimate superpower of seeing your money from all different angles instead of just one! Or even none!
Here’s the key:
- Budgeting + Net Worth tracking = Wonder Woman
- Daily budgeting – OR – Net worth tracking = Wonder Girl
- Doing nothing at all = The Joker ;)
(It literally took me 30 minutes to come up with that, haha… was it worth it??)
At the end of the day, it’s all about testing different things until you find the one that *clicks*. And when you finally do, you ROCK THE $HIT OUT OF IT AND NEVER LET GO!!! You ride that puppy straight into Financial Freedom and count your lucky stars along the way!
Some people find it on the first try, and others are still searching decades later. Whatever it takes, just don’t give up. And in the meantime, we’ll keep sharing whatever ideas pop into our heads here to help you get to that point sooner than later :)
Questions, comments, concerns – drop them below and we shall discuss…
PS: If you’re just starting out in your journey, I *highly* recommend budgeting and tracking every last penny that comes in and out of your life FIRST before skipping right to net worth tracking. It does wonders once you know yourself and your habits well, but until you can get to that point you need to understand where all your money is going and why. You have to start as Super Girl before you can grow into Super Woman!
PPS: Here’s the podcast I was on that instigated today’s thoughts –> Interview with J. Money from Budgets are Sexy. If you hated it, you can blame Alain :)
Jay loves talking about money, collecting coins, blasting hip-hop, and hanging out with his three beautiful boys. You can check out all of his online projects at jmoney.biz. Thanks for reading the blog!