[This is a guest post by Hank Coleman]
It is the first of the month, and you know what that means. Good old, J Money, has published how much his net worth has shot up over the course of the past month. He is up $4,000 this month which is not even close to his usual increases ($6k-$10k). He’s maxed out his 401(k) plan at work, and now he has totally maxed out his Roth IRA to boot.
But, to tell you the honest truth, I can’t stand J Money’s net worth updates. They make me sick! Don’t get me wrong. I want J and Mrs. J to be successful and financially sound, but sometimes I get depressed when I hear how well he is doing compared with how poorly I’m doing saving for my own financial goals and retirement.
Net Worth Is A Game
A lot of people will not like it when I say this, but saving money and investing is a game. It is a game just like football. And, like Vince Lombardi said, winning isn’t everything, it’s the only things. Building your net worth is a game, and money is the scorecard. It sucks that it has to be that way, but life is that way. And, anyone who thinks differently is delusional. Net worth is a game, and I hate losing. That is why I hate when J Money publishes his net worth figures every month. I’m losing.
J Money Is A Great Motivator
You should compare your net worth to other people in your age group, salary level, and job tenure. J Money wrote about the importance of tracking how your 401(k) balance stacks up against other people a few months ago. While I do not like to lose, I cannot negate the fact that J Money motivates me to try harder, invest more, watch my spending with a budget, etc. I have not maxed out my 401(k) plan at work yet. I have trouble coming up with the $16,500 per year or $1,375 per month, but I continue to raise my 401(k) contribution level by at least 1% every time I get a raise. If I don’t, then there is no way that I will ever catch up to J Money.
Everyone Should Track Their Net Worth
According to a survey conducted by the Consumer Federation of America (CFA) and the Financial Planning Association, less than 49% of Americans actually know their net worth. Everyone should track their net worth. Tracking your net worth lets you see where you stand financially and how healthy your family’s financial situation is. Are you meeting your financial goals and dreams? Are you headed in the right direction or sliding backwards? Do you need to catch up to J Money and max out your Roth IRAs and 401(k)? How do you know if you are saving enough for retirement if you do not know how much your net worth is?
See where you stack up to your peers with this great net worth calculator sponsored by CNNMoney.com and Nielsen Claritas. Sometimes there is no greater motivator than taking stock of your own situation against your peers and others like J Money. While I cannot stand it when he tells us all how great he is doing, it motivates me nonetheless to try and up my financial game and beat him. One day I will, but until then, I’m definitely going to keep trying to raise my net worth.
Hank Coleman is the founder of several personal finance blogs. He is currently a freelance writer and entrepreneur. You can see more of his work at Hank Coleman.net, and you can also follow him on Twitter @hankcoleman.
(Photo by borman818, exclamations by me!)
PS: If you’re just getting started in your journey, here are a few good resources to help track your money. Doesn’t matter which route you go, just that it ends up sticking!
- The "Budget/Net Worth" spreadsheet - the colorful Excel template I personally use.
- The "Money Snapshot" spreadsheet - a simple Excel template I created for my former $$$ clients
If you're not a spreadsheet guy like me and prefer something more automated (which is fine, whatever gets you to take action!), you can try your hand with a free Personal Capital account instead.
Personal Capital is a cool tool that connects with your bank & investment accounts to give you an automated way to track your net worth. You'll get a crystal clear picture of how your spending and investments affect your financial goals (early retirement?), and it's super easy to use.
It only takes a couple minutes to set up and you can grab your free account here. They also do a lot of other cool stuff as well which my early retired friend Justin covers in our full review of Personal Capital - check it out here: Why I Use Personal Capital Almost Every Single Day.
(There's also Mint.com too btw which is also free and automated, but its more focused on day-to-day budgeting rather than long-term net worth building)
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I fully agree that J is an amazing motivator. I vow (within 3-5 years) to max out my HSA, Roth IRA, 401k, and drop an extra $10k onto my mortgage. This will be my first year accomplishing #1, and the first year in a long time NOT accomplishing #2. However, as my epic year of house renovations draws to a close, I’m looking really hard at budgeting in #1, #2 and half of #3 next year.
Keep motivating J. Money. Someday my money will work for me instead of vice versa.
I personally find my motive by focusing on my passive income. I was raised with the understanding that passive income was what would enable choice in my life. If I have sufficient passive income, I can take a lower paying but more rewarding job, or travel for a few years. I never felt I could afford fancy homes, cars, and “stuff,” until I had sufficient passive income to enable the choices I wanted to make in my life. This attitude saved me a fortune in junk I didn’t need, but might have bought on a whim, because all my friends had one. I know of no greater motivator than to look at the passive income I have earned that month, and how that will enable me to earn even more passive income next month.
Making your Net Worth a game definitely keeps you motivated. My Grandfather retired at the age of 62 with a small retirement fund built from his career of teaching. Tracking and participating in his retirement kept him busy and his mind sharp for the next 30yrs. When he did at the age of 92 he was a millionaire. My other Grandfather, the banker, had to claim bankruptcy the year before his death. It’s like a warped ‘Rich Dad Poor Dad’.
I personally look forward to J.Money’s net worth updates because then I can stop focusing so much on mine, that it gives me a break to see another more advanced masterpiece of budgetary spreadsheet at work. As far as motivating goes this blog as made me even more frugal in my ways, Thanks for that!
I think it’s great that J. Money motivates you, he does me as well. But I don’t think you should be worried about “keeping up” with him. Your situations are both very different I’m sure and what works well for someone might not be right for you. Yes, J. maxes out his 401k but that’s because he gets a employer match on the whole thing. If your not getting a match then I actually think that maxing it out is a terrible idea. My point is, don’t be depressed and think that you have to keep up with J’s net worth, every finance situation is different. Be proud that your trying to improve yours…hey that’s more than what most people do.
J Money really is killing it is he not! I would LOVE to have net worth increases like he has. I agree with you that it certinly does motivate me. Unfortunetly for me, right now the biggest way I can increase my net worth is by paying down debt. I’m looking forward to teh day when extra $ can be put towards savings! I also like his net worth updates because they are clear and conscice, with good explanations. I really appreciate content like that!
Great guest post! And thanks for being such a great motivator J Money!
J Money definitely inspired me to keep track of my net worth on my own. I had been trusting Mint to do it for me, but I found that tracking it myself in Excel made it somehow seem more real to me. I think my family is on a 4 year plan to get my husband’s 401k maxed out, but we’re at least receiving the maximum company match.
The thing I envy in J Money’s net worth updates is having a clear, set value for his home. I’ve been relying on Zillow and believe when I say it’s giving me a headache.
I started tracking my net worth thanks to J$. It’s been really interesting to watch how it changes and see how it grows (slowly) over time! Just another motivator to pay off those darn student loans…
J Money you’re definitely someone to look up to as far as finances. I can understand where Hank is coming from; it’s sort of depressing know some of us aren’t in a similar situation, but you DO motivate us to get to the point where WE will want to share out net worth with the world too. Right now, I’m a little embarrassed to admit it to everyone, but I hope many more of us can be on your level :)
You’re my benchmark! Thanks for the motivation and for letting me “borrow” your readers today. I’m glad everyone didn’t hate the guest post as much as I thought they would. I forgot that everyone just wants to sing your praises….me too most of the time. Just not on the first of the month when you publish your latest and greatest net worth updates. Thanks again…
I think this is an important reason why so many of us PF bloggers DON’T highlight our net worths. If you’re somewhat annoyed with J’s net worth, can you imagine how annoyed you would be seeing a 28 year old net worth at $1 million+ and saying, +$25,000 in August etc?
This is why I think it’s very important if you have a high income & net worth to remain hidden and let others highlight their figures to the world.
I was glad to see that for my age and salary that i was ahead of the CNN Money Net Worth calculator. Perhaps I can sleep easier at night….I THINK NOT!
Woah, wasn’t trying to get so many compliments! Haha… I actually thought I’d get a little more feistiness outta you guys ;) But I’ll gladly take them, thx!
And huge thanks to Hank for speaking his mind and laying it all out here. I would have never guessed that you (and others) have felt this way – sometimes I just blog from my head and see what happens, so glad it provokes some emotions!
As long as you’re reading this for motivation, that’s great. Def. not worth comparing your situation to mine directly since we’re all in different scenarios and jobs/preferences/etc. Everyone on this blog is *working* towards financial freedom, so pat yourself on the back just for READING about finances online! We may sound dorky to some, but we are rock stars here!!!
@Melissa – YES! keep it up!!! Sometimes you can’t do everything, every time, but you can keep pushing forward and rockin’ it! Very proud of you.
@Kaci – That is a VERY important notion – setting up ways to get that passive income. A lot of people look for the “quick fix” on this, but if you really put in the time and passion and get something up and running that’s sustainable and brings in money as you sleep (although usually you always have to do *something*), you can live way more financially free. I feel like my blogging empire falls into this a little bit, but def. not entirely as if I stop blogging and maintaining eventually the $ will go away…or maybe not? ;) (keep in mind that blogging for me is a hobby though more than it is a money maker – it took me months and years to make pennies)
@Molly On Money – Wow, that’s so interesting! Crazy how diff. lives can lead in extreme directions like that.
@Uncle EL – Love hearing that – esp since it feels like I’m doing much more spending than saving at times ;) Then again, yet another reason to track our overall financial picture every month! Sometimes I’m actually saving more than I think or give myself credit for. Glad it helps motivate you!!
@MoneyMan – Couldn’t have said it better – thanks for sharing this! So true, it’s okay to check out how we’re all doing separately from yourself, but we are all in different boats. Just keep pumping away on your goals and we’ll all reach them at some point!
@myfinancialobjectives – Thanks mate, glad they’re not as all over the place as I sometimes think :) keep paying down that debt! I need to do the same too in the mortgage department, we all have our problems to work out.
@Jenna – Thanks for reading and always commenting Jenna :)
@momcents – Home values are very frustrating, I agree. Mine’s not as perfect or definite as I’d like (nothing is ever that way until the day of contract signing), but at least educated guesses give you something to keep track of. We may not be able to control these numbers in particular, but we sure can all the others! (savings, investments, debt, etc etc)
@Jenna #2 – This makes me so happy hearing people DOING something about their finances cuz of this blog! thank you so very much for sharing :)
@Briana @ GBR – We all want to be on someone else’s level, even me ;) But it’s def. nice having goals and people to look up to a bit so we can get pushed toward the right direction. Glad I add value in this world! haha…
@Hank – Haha, thanks again bud. We’re all a community here, so holler any time!
@Financial Samurai – True, but also kinda not. I think people could def. hate on those with extreme net worths like that, but at the same time THOSE are the people I’d like to read about and try and follow so I can get to that point too. So I guess it can go both ways. And I’m fairly confident you are in this category of high net worths mr, and look how well you’re doing! ;) (you don’t have to list your net worth for people to know you’re on the right track, keep rockin’ it bro – you are killing it)
@Steve – Haha… it’s kinda comforting at least ;)
“Building your net worth is a game, and money is the scorecard. It sucks that it has to be that way, but life is that way. And, anyone who thinks differently is delusional.”
Love the quote, very profound.
When we read this, we tend to agree and concede its truth, but rarely do we all enact and keep this harsh reality in our minds (with exceptions always). I feel in order to be competitive and successful at this “game” we must keep reminding ourselves of the rules.