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Annotate Your Net Worth Figures

Posted By Jim On 07/17/2007 @ 5:11 pm In Personal Finance | 4 Comments

Do you track your net worth? I do and so does Five Cent Nickel, who recently talked about his historical net worth numbers [3]. The most interesting part about his historical look back, with the help of Quicken, were the notes and they put the percentage changes into a little bit of perspective.

Let’s say you’re looking at your historical figures and you see a 21% drop in your net worth. That is, your reward for all that hard work the last 12 months left you with less value than when you started. That’s a pretty tough number to swallow… until you put it into context. In 1999, Five Cent Nickel’s net worth did just that… it fell 21%. It fell because his wife left her job and they bought a new minivan. That makes the 21% decrease palatable, that’s what happens when you’re young, in love, and starting a family (it’s expensive!). The next year, Nickel switched jobs, they had a child, and their net worth more than doubled.

Numbers are just numbers and meaningless in a vacuum. If I said my net worth increased 5000%, it’d be awesome, unless it was only a penny to start. Annotating your records will put them in context and you can choose to be as detailed or as broad as you would like. While you can remember everything now, try remembering things ten years from now and differentiating them from 2007 and 2006. Outside of major events like births, you’ll find it a struggle to get it correct without some deeper research. So, lesson the day, keep notes on your net worth figures.


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[2] Email: mailto:?subject=http://www.bargaineering.com/articles/annotate-your-net-worth-figures.html

[3] historical net worth numbers: http://www.fivecentnickel.com/2007/07/17/historical-net-worth-numbers/

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