Prior to this summer, when I paid off my student debt, I didn’t think about my net worth. Why? I’ve been using Mint as a budget calculator for over four years, and the site couldn’t account for my loan balance because I owed my parents, not the bank. However, now that I’m done with debt, things have changed.
Why am I sharing my net worth?
I debated this for quite a while. Part of me doesn’t agree with being too open about my finances, for security purposes. The other part of me wants to be transparent about what I’ve been able to achieve with ~3 years in the workforce. This is my compromise:
My retirement accounts make up 84% of my total net worth (sum across all 401K and IRA accounts). My Roth IRA is the largest account because it includes rollover funds from my previous employer; I contributed almost entirely on a post-tax basis while I was there because I lived at home and had low living expenses. My current employer does not have a Roth 401K plan; I’m limited to contributing on a pre-tax basis only. Still, with almost two years at my current job, my 401K has grown to a sizable share of my total net worth.
I opened a personal investment account at the end of 2016, as part of my financial goals for 2017. I’m happy to see that it now makes up 12% of my net worth; the account has almost reached $10K in value which is fantastic for me.
To calculate my cash assets, I took the value of my checking account and subtracted my total credit card balance. I have multiple savings accounts that I set aside for different goals, but the overall balance is low, thanks to a huge two-week trip to China that I just got back from.
Many of you might have more categories than me. I have no outstanding debt, nor do I own any property, so calculating my net worth is extremely straight-forward.
What is my total net worth?
As of November 2017, my net worth is $82K. In a typical month, when I’m not Christmas shopping or going on vacation, this number increases ~2-3K. In my first two years working, net worth spot checks weren’t as exciting. I was making less, and my retirement account was brand new. Now that I’m nearing a six-figure number, I monitor my net worth far more closely. My prediction? I’ll reach $100K around next June, maybe slightly earlier if the markets hold up and I don’t frolic off to any more countries.
How do I stack up against other people my age?
I know I have more saved than the average college graduate three years into their career. Do I think my number is unreasonably high? Not at all. The average student loan debt in 2014 when I graduated was $33K, (I had $35K). I easily saved thousands by not having to pay interest on my loan, but I would’ve paid it off just as aggressively regardless.
Having the vast majority of my net worth in retirement savings isn’t surprising to me. Workplace retirement programs are, in my opinion, the most effective way to help recent grads save money.
Compared to other bloggers; mainly the Rockstar Finance Net Worth Tracker Directory, $82K puts me in the 300s (bottom 30%) across all personal finance bloggers who publicly share their net worth. Compared to bloggers in their 20s who share their net worth, I’m 63rd out of 121 (smack dab in the middle). It’s not the most realistic sample to measure up against, but it’s still informational.
What are my net worth goals?
Other than making the number as big as possible (duh), my main focus is on the distribution across accounts. In the next 5-10 years, I want to add some property (real estate, not a car) as a category. While I expect to max out retirement contributions every year from here on out, I want the overall share of retirement funds to go down, meaning the share of savings and personal investments, as well as any other new categories, needs to go up.
Knowing your net worth is a great snapshot of your finances (as is your savings rate), but a single number doesn’t dictate your financial health. Over time, charting your net worth shows your trajectory towards financial independence (or whatever your financial goal may be). From there, tweaking the different levers that affect your net worth (income, debt, expenses, investments, etc.) can help you get a sense of what’s achievable given your situation.
Pro tip: use others as a benchmark if it’s helpful, but only compete against your past self and your historical rate of growth. Otherwise, pursuing an increased net worth gets incredibly demoralizing.