How often to check your net worth, and what to look at

Check your net worth once a month, on the same day each month, and look at four things in this order: the change since last month, the change since twelve months ago, how much of the change was money you kept rather than market movement, and whether any balance is stale. Monthly is often enough to see the direction and rare enough that the reading isn't noise. Daily checking measures the stock market. Monthly checking measures you.

Why monthly, and why the same day

Net worth moves for two reasons. The first is money you kept: income that didn't get spent, whether it sat in checking, went into an investment account, or paid down a loan's principal. The second is changes in what your assets are worth: the market, the housing estimate, the car losing value. Only the first is about you, and it is small on any given day. A 1% market move on $50,000 of investments is $500, which is more than most households keep in a week, so a daily reading is mostly the second reason wearing the first one's clothes.

The same day each month keeps the readings comparable. A reading taken after payday and before rent is not comparable with one taken the day after rent, and the difference between them is bookkeeping, not progress. Pick a day, such as the 1st or the day after the bills clear, and keep it.

The four things to look at

1. The change since last month. The headline: up or down, and by roughly how much.
2. The change since twelve months ago. The trend, which is smoother and more honest than any single month, and the figure to compare with what you expected to save.
3. How much of the change was you. Split the change into money you kept and movement in asset values. The first is the part you can act on.
4. Whether any balance is stale. A manual account that hasn't been updated, a connection that stopped syncing, a home value from years ago. A stale balance makes the other three readings wrong.

Split the change into you and the market, step by step

1. Write this month's and last month's totals for assets and for liabilities, and the net worth from each.
2. Compute the change on each side, account by account.
3. Add up what you kept. Start with the change in cash, then add every other move that only changed money's form: what you moved into investment accounts, less what you took out; the change in any balance someone owes you, up for money you lent and down for money repaid; the fall in each loan and card balance, which credits the principal you paid and counts new borrowing and unpaid interest against you; and the full price of any asset you track that you bought, less the price of any you sold. Each of these is money changing places, which is why the cash change and the fall in a balance are both counted rather than the payment. The total is the income you didn't spend.
4. The rest is the market: the change in net worth minus what you kept. This is the growth or decline in what your investments and property are worth, and it is the part you can't act on.

A worked example

The same household a month later, with every balance updated on the same day.

The headline is up $1,350. The split says more. The household kept $2,420: $450 more in cash, $700 contributed to investments, $970 of loan principal across three loans, and $300 off the card. The investment accounts nonetheless fell $370, because the market took $1,070 off them after the $700 went in. So the month was a good one for the household and a poor one for the market, and the headline hid both.

What to do with the reading

Compare the twelve-month change with what you meant to keep. If the plan was to keep $2,000 a month and the year's change is about $24,000 with a flat market, the plan held. If it is $12,000, the cash flow side is where to look.

Investigate any large move you can't explain. A jump or a drop that doesn't match what you kept and what the market did is usually a stale balance or a missing account, not a real change.

Update manual values on a schedule. The car quarterly, from a resale estimate. The home once a year, from a realistic estimate rather than a hopeful one. Between updates, treat those lines as constant and read the rest.

Common mistakes

• Checking daily, then reacting to the market instead of to your own behavior.
• Judging a single month. One market month, one bonus, or one car repair makes any month unrepresentative.
• Never updating manual balances, so the car is still worth what it was worth three years ago.
• Comparing readings taken on different days of the month, before and after payday.
• Counting a principal payment as a gain. Cash went down by the same amount the loan did; only the interest you stopped owing is the gain.
• Letting a broken connection read as a drop. An account that stopped syncing sits at its last balance and eventually looks wrong.

Common questions

Is checking daily harmful? Not harmful, only uninformative. The daily change is dominated by market movement, and the part that reflects your decisions is too small to see at that scale. Monthly makes it visible.

How much should net worth grow each month? By roughly what you keep, plus or minus the market. There is no benchmark to meet; the useful comparison is your own figure from twelve months ago, and the useful question is whether the money you kept matches what you intended to keep.

Why did my net worth not rise when I paid off a loan? Because it shouldn't. Paying $5,000 of principal from savings lowers assets by $5,000 and liabilities by $5,000, and net worth stays where it was. The gain is the interest you no longer pay, which shows up as a larger amount kept in the months after.

What day of the month is best? Any day, kept the same each month. A day after payday and after the rent has cleared gives the cleanest reading, because the month's largest movements are already on the ledger.

Should I track net worth or just my savings? Both, and net worth is the one that can't be fooled. Savings alone ignores the loan balances and the asset values, so a household can watch its savings rise while its net worth falls.

How Zypper handles this

Zypper charts net worth over time from every account, so the monthly reading is a point on a line rather than a number to write down. Connected accounts update automatically every day, and manual accounts contribute whatever balance you last set, which is where the stale-balance check above comes in: the connections settings show each institution's status and when it last updated, a connection that expires stops syncing and Zypper emails you about it, and a manual balance stays where you left it until you change it. If the number looks off, the usual causes are an account not yet added, a manual balance that needs updating, or an expired connection that stopped syncing. See Net worth tracking and Checking connection status and refreshing for the details, or get started with Zypper to see your own line.