How to track your net worth in 5 minutes a month

Your net worth is everything you own, minus everything you owe. One number. Worked out once a month, it tells you something no account balance can: whether you're getting ahead, falling behind, and how fast. It takes five minutes, and here is what they look like.

Why this number, and not your salary?

Salary says how much money comes in. It doesn't say how much stays. Your chequing balance doesn't either: $5,000 in the account can sit on top of a growing RRSP or a deepening line of credit. Net worth puts both sides on the same line.

Take Camille and Samuel. Same age, same $80,000 salary, two situations that have nothing in common.

The salary can't tell the two apart. Net worth can.

The method, in four steps

1. Add up what you own (2 minutes)

Open your banking apps and write down the balance of each item:

• TFSA, RRSP, FHSA: the balance as shown.
• Brokerage account (the one where you buy stocks or ETFs, those baskets of stocks bought in one trade).
• Savings, chequing, crypto, at today's value.
• House or condo, at the price it would actually sell for. Not the neighbour's 2022 price.
• Car, at a rough resale value.

To the nearest $100 is plenty: a $2,000 error on $180,000 is 1%, and nobody makes a decision on 1%.

2. Add up what you owe (1 minute)

• Mortgage: what's left to pay, from the latest statement.
• Student loan, car loan, line of credit.
• Credit cards, but only what you won't pay in full this month. A balance you clear every month isn't a debt, it's a delay.

3. Subtract (10 seconds)

What you own, minus what you owe. If the result is negative, breathe: that's almost everyone fresh out of school. Watching that number climb back up is exactly why you write it down.

4. Write it down, with the date (1 minute)

This month's number doesn't say much on its own. Next month's starts to talk, and a year of them tells the story. A note on your phone is enough.

Do the car, the furniture, the pension count?

Count what you could sell for a real price within a few months. The car and the condo, yes. Furniture, phone, TV, no: they lose value too fast. Your record collection doesn't make the cut either, unless it's genuinely remarkable.

A defined-benefit pension (the kind that promises a fixed monthly amount in retirement) is hard to turn into a single number today. Leave it out: your trend stays true, just a bit more modest than reality.

The two classic traps

Checking too often. Markets move every day, so does your net worth, and it means nothing. Once a month is enough to see the trend without worrying about the noise.

Forgetting the debts. A $60,000 TFSA feels great, right up until you remember the $35,000 student loan. Both sides, every time.

So what's a “good” number?

There is no right net worth for a given age, and anyone who gives you one with confidence is guessing. For a sense of scale, common ranges in Canada:

These are ranges, not a report card. The useful question isn't “am I in the range”, it's “is it going up month over month”.

What you can do right now

Do the calculation once today, even roughly, and note the date. Next month, do it again. You'll then have something your account balance never gave you: a direction.

And if your next question is “which account does this month's savings go into”, that's the subject of TFSA or RRSP: which account comes first?