How This Annual Routine Adds To Your Wealth Habits

You don’t have to be rich to do this.

We’re barely into the new year and I almost forgot about my annual routine. This little habit, I’ve been doing for at least the last decade. Each time when I’m finished, I feel a lot better.

At least on most occasions.

There were a few times when I wasn’t as happy as I wanted to be.

You see, each year I do a roll-up on my wealth.

No one says you need a financial planner to tell you where you stand. In fact, you need to know your numbers better than anyone else.

Plus, it’s not that hard. As long as you have access to your account statements or an email reminder on your assets, you’ll do great determining your wealth. This is a very simple and easy process to do.

Wealth is as easy as knowing your A, B, Cs

In school, you may have heard about wealthy people. You know, the Vanderbilts, the Carnegies, the Waltons, Buffett, or even Elon Musk of today.

These individuals grew their wealth during their lifetime. Then some passed their wealth on to their heirs. That’s what I want to do.

I didn’t grow up with money, but if I could pass some on to my kids and their kids, now that right there is creating a legacy. Of course, this is not a simple process.

It’s more than just having a bank account these days.

This requires having a will, trust, life insurance, stocks, real estate, and other assets.

Then the more complicated your assets; you may need a financial planner.

Let’s start from the beginning before I go any further.

Wealth = Assets — Liabilities

Your wealth is the accumulation of your assets minus any liabilities (people you owe money to).

• If you have credit card debt, that’s a liability
• If you have a car loan, that’s a liability
• If you have a home mortgage, that’s a liability

Essentially, you want more assets than liabilities which equals your wealth.

• So if you have a paid-off car, that’s an asset
• If you have money in the stock market, that’s an asset
• If you have equity in your home, that’s an asset

It’s important to accumulate more assets than liabilities in life. So think twice before you buy your next item.

End of the year routine

At the end of each year, I compile a list of my assets. Fortunately, I already have the list started on an Excel spreadsheet.

So at the end of the year, there are usually a few days when the stock market is closed. That would be the best time to update your wealth database.

Of course, some people use other tools to calculate their wealth. Some people may use Mint.

Whatever method you use is fine. Personally, I like my list since it covers other areas that some charts don’t cover. For instance, cryptocurrencies are usually not part of many spreadsheets. Real estate is another.

I normally get email updates on my real estate value from real estate agents or home monitoring sites such as Zillow. These figures may not be 100% correct but they are very close to what the home would get listed at if they were on sale.

Once you build your chart, make sure you cover the basics. This means all your bank accounts, investment accounts, real estate, and other areas.

For some, you may have to give it your best guess. I have sports cards and comic books, so I’ll guess how much they’re worth. Of course, it’s been years since I looked up the price of these, so I may be way off.

If you don’t know the price, just make up a number for now.

Here’s an example I created.

With an Excel spreadsheet, you can easily add up the numbers for your total. Then each year, you can compare how your portfolio did compared to past years.

This is more useful than you think

You may think why should you bother doing this?

In many forms today, companies ask you what is your net worth. This may be from a credit card company or a loan application you’re filling out. You may not want to know, but someone else does.

This annual routine becomes more useful than you think.

Your main goal should be to have more assets than liabilities. When you have more assets this opens you up to more opportunities in life.

You may get invited to certain events, clubs, or groups based on the amount of wealth you have. If you think wealth only applies to rich people, then you are wrong. Wealth is an important factor that some think is important.

Do you have a personal routine that you do every year?