FF Challenge – Day 2: Shift to a Net Worth Mindset

Here we are for Day 2 of the Financial Freedom Challenge! How did it go with the first step? I hope you have completed it! If yes, you’re ready to proceed with the second πŸ™‚

As you probably know if you’ve read my Passive Income Reports this year I started to track my Net Worth. I’m currently tracking it every 3 months, but starting from January 2020 I want to track it every single month.

My today’s task is to make you understand the importance of a Net Worth Mindset. Are you ready?

What’s today’s task?

I decided to dedicate Day 2 of the Financial Freedom Challenge to a combination of a mental task and a practical task.

The mental one is the following: Shift to a Net Worth Mindset.

First of all, what’s the Net Worth?

To make it simple, it’s the difference between your Assets and your Liabilities. Do you remember that yesterday I assigned you the task to list all your Assets and Liabilities? Well, now it’s time to compute the difference between them.

From now on when you think about your financial situation you have to take into consideration your Net Worth and its evolution over time, not your Income. Clear?

Maybe you’re wondering why. The answer is simple: by taking into consideration the Net Worth (and not the Income) you consider your financial situation as a whole (Assets and Liabilities), and not only the positive aspect. This allows you to confront yourself with reality, and not with the idea that you have about your financial situation. Never forget that our goal is thinking for the long-term.

Let’s move on to the practical task.

As you can see in the image below, my spreadsheet automatically computes the Net Worth month by month. You just need to insert the correct data (Assets and Liabilities). Do not touch the colored cells (you’ll see them in the spreadsheet).

I also inserted an annual chart for your Net Worth, so you can easily check how it will evolve.

Download the spreadsheet here:

Start tracking your Net Worth is a crucial step to achieve Financial Freedom because it makes your financial situation clear and highlight what you need to work on the most.

As you’ll see by downloading the spreadsheet, I created two sheets: one for 2019 and one for 2020, so you can use it also the next year. Moreover, by copying the sheet, you can use it for how many years you want.

A brief summary of today’s task of the Financial Freedom Challenge

  1. Check the computation of your Net Worth
  2. Track it and check how it evolves over time
  3. Repeat point 2 every month throughout your life

Never forget to update your sheet of paper / Excel spreadsheet. I hope I made you understand how important is tracking your Net Worth.

My Experience

I started to track my Net Worth at the beginning of 2019. I post on the blog an update about its evolution every 3 months. Check out my latest updates:

The next update will be in the Financial Goals Update of September. As I said many times I intend to create a section on the blog (maybe a page) completely dedicated to my Net Worth and to update it at least once a month, so you can better follow its evolution. Would you appreciate it?

Final recommendations

The second step is over and I hope you enjoyed it! If you have any questions about the challenge, write a comment and I’ll be glad to answer you πŸ™‚

Besides share in the comments your opinion about this second step. Were you already aware of the Net Worth Mindset? How is going your Financial Freedom Challenge?

Come back tomorrow for the third step and remember to follow us on Facebook and Instagram! Share this challenge on your social media: this will keep you motivated during the path, trust me πŸ™‚ If you want a direct contact with me (answers, discussions, doubts, advice…) or the other participants of the Challenge, join our Telegram groups (ENG Group, ITA Group).

Finally, subscribe to the blog if you want to receive the next steps directly on your email:

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2 Replies to “FF Challenge – Day 2: Shift to a Net Worth Mindset”

  1. This is a dumb question but I don’t know how to enter my real estate. I own my home but not really since I am still paying a mortgage. The mortgage is in the liabilities. Do I not enter the home as an asset until it is paid off? Or just estimate its value in the assets column? What about monthly expenses that aren’t debts?

    1. There are no dumb question! πŸ™‚ Don’t worry about “really owning” your house. You just have to put it in your Assets and the mortgage in the Liabilities. There is always a correlation between Assets and Liabilities.
      Moreover, do not make confusion between Assets/Liabilities and Income/Expense. They are two different things. We talk about Income/Expenses in Day 4.

      Is it all clear? πŸ™‚ Let me know!


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