Thursday, May 28, 2015

Why I Calculate My Net Worth

So, here's the thing. This life is temporary, and what I have is not "mine". I need to hold onto it with hand wide open. So, why do I measure our net worth?

First, net worth is completely arbitrary. On the whims of the stock market, certain necessary but painful purchases, and many other factors, our net worth could change drastically at any moment. So, why bother at all? Why not just trust that God can provide for us, or bury my head in the sand and ignore the current financial situation?

Yes, God will provide. Which is why, when I see our net worth, I don't pat myself on the back or relax that I have big, new, full barns (because this very night my life could be taken). However, I also don't want to be the person that literally buries money in the ground either. If you're not up on your Bible references, check out Luke 12:13-34 and Matthew 25:14-30.

So, if you don't want to bury your head in the sand, and you also don't want to be greedy, what should you do?

First, make sure that you are giving. If there is anyone in this country (even if you are on food stamps or make minimum wage) and you don't give SOMETHING away, then you are being greedy. I don't care if it's a $5 or a $50,000 donation, every single person in this country is rich. Sometimes, the less we have, the tighter we want to hold onto what is "ours". But God says that nothing is ours, He has provided everything.

Other times, the wealthier we are, the harder we try to hold on to what "we've earned". I'm pretty sure that I haven't earned anything. I've not earned my salvation. I've not earned my education. I've not earned my amazing kids. Can we really earn money? What is money after all, but a few pieces of paper and non-precious metal at best. Most of the time it's just plastic or our online stock quotes.

Now, back to why I track our net worth. It gives me a quick snapshot of where our trajectory is. On those days, when I feel footloose and fancy free in my spending, I can take a reality check and see what I really have and where I've been and how far I still have to go. It also can show me what the market is doing compared to what my "savings" are.

How do I track our net worth?

I've set up a really simple excel spreadsheet. I try to go in at least every couple of months to update the figures. Since I don't often re-balance any of the retirement portfolios, this can be an opportunity to double check that things are working well together at their current percentages (our largest balances are automatically re-balanced). Basically, I include the retirement accounts in their own category (we really should try to rollover my husband's old 401(k) when we have the time). Then I include all cash (checking net of credit cards + savings). Then I include some basic number for car value and equity. Usually I just use the subtotals, because that big "net worth" with the home equity and cars isn't really very liquid. But the big "net worth" is needed, because otherwise two years later I might not recognize that when our net worth changed drastically it was because we bought a new car that month.

So, what does my net worth tell me? It tells me I need to work harder at being a diligent steward (I did finally transfer over our HSA balance from a former employer, so I may start including that on the spreadsheet). It tells me I need to work harder to make sure that our home investments are spent wisely, as we've "lost" some money in the house transactions (our break even point on this home is about 6 years due to home repairs that are needed). I need to ensure that our giving continues and pray for God to show us other areas in our budget that we can give from. We have our "usual" tithe, sponsored children, and Christmas giving (i.e. Operation Christmas Child, etcetera). Is there another area that we're being called to give? And it also tells me that I need to continue to trust God. By worrying, I can't add a single hour to my life. So, I plug in our new net worth numbers, and thank God for what He's given. Then I close my eyes, and rest in His wisdom and peace.
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