Updating My Net Worth For 2023

Every year, for over 20 years, I take time at the end of the year to look at my finances. (Now “our finances,” but considering who does most of the number crunching, I will continue in the first person for this post.)

I calculate my liquid worth, I review my spending in the year just past, and then take a look at my savings goals for the coming year.

I think these exercises have been helpful over the years, and not just because they tend to keep me off the roads around a dangerous holiday. They keep me honest about my debts and spending, and force me to prioritize financial goals over the coming year.

I will go through the net worth and savings goals for 2023 below; a review of the yearly spending takes longer, and should show up within the next month, if all goes well.

(Just to be clear: I am not posting my net worth on the Internet. Even though this is supposed to be an anonymous blog, I have been asked by Mr. PiN not to put our real numbers out there.)

The Net Worth

Strictly speaking, I do not calculate my real net worth. I don’t bother with the estimated value of my house, my car, or other material goods.

Instead, I am only concerned with my liquid net worth: money I can realize within a very short period of time, minus legally owed liabilities.

At the end of the year, I log into my retirement accounts, my bank accounts, investment accounts, and write down the totals.

I log into my credit card accounts, and total up the balances due. Before I paid off my house and car, I would see what I still owed on them too.

Some quick arithmetic (add up the assets, subtract out the debts) and, voila! I have my net worth for the year.

Over the years, this has kept me honest about my debts: adding them up every year means I can’t ignore them.

Some years, this chore has reinforced the importance of investing. There’s nothing like seeing your net worth jump more than your gross salary; but if you don’t invest, that can’t happen.

Funding Goals

The other part of this exercise involves my yearly (financial) goals.

After all, numbers on a page may be nice, but it’s more important to think about what will that money do for me? Also important: what should I do with new money, to further my dreams of the future?

What did that look like this year?

Earmarked Money

I don’t have a separate account for each savings goal, but do check to make sure that I have enough money saved to cover each, before I add other costly wishes.

• Emergency Fund: 6 months of spending (newly calculated each year).
• Car Fund: I increase my goal every year by (roughly) the amount I was paying previously for my car payment. Last year I thought maybe I could stop adding to the account, as we could trade in the old car; however, it is starting to look like we want to return to being a two-car household.
• House Fund: For taxes, and house projects. I top this off every year to a certain amount. In theory, I should add 1% of my house’s value every year and let this keep growing, but psychologically, I can’t keep that much put aside.
• Vacation/Travel Fund: Also topped off every year.
• IRA. Money put aside for his-and-hers Backdoor Roth IRAs.

I was able to do all of the above, which makes me feel like I am doing OK financially.

Next on the list are the “bonus” projects. What I choose to place as a big goal changes periodically. These are mostly dream goals, which I may or may not achieve before changing my mind.

In the past, these have included:

• Mortgage Payoff Project. This is now completed, but was at the top of the list for a number of years (it displaced the Invest More Fund once I bought the house).
• The Piano Fund. I grew up with a very nice piano in the house, and hope to have another nice piano in the future. (My mother has half-promised I might get the old piano, if I clear a spot in my house and actually start playing. So I am letting this money goal go, for now.)
• The Addition Fund. Our current house is not set up well for old people. I suspect the wiser move is to (eventually) admit that we are getting older and move to a more accessible home. Mr. PiN doesn’t like that plan, though. We may be able to put an addition on the home in the back to help us grow old in the home more safely. I have no idea how much that will cost; I am guessing it’s “lots.”
• The Retirement Cash Stash. My current goal for 2022-2024. I have been thinking about building up my cash reserves in case I really do retire in the next few years. I ought to have more than 6 months’ worth of spending in cash, to cushion us against a possible stock crash just after my last day of work. In fact, I’d like to have 3 years’ worth of spending stashed away, for just in case. We are actually getting close, unless you start thinking about health insurance costs.
• Invest More Fund. This used to be at the top of this list, about 15 years ago. I am hoping that it will return to the top, once that Retirement Cash Stash is actually completed.

The 2023 update

Some readers may wonder: what did 2023 do for (or to) the PiN household?

Unlike last year, where I saw a decrease in new worth that was greater than all the money I made in 2022, this year I had some good news. I saw a very nice increase in net worth: 29% over last year. That’s mostly from investing, but also includes the savings I put aside from my paychecks over the year.

The Plan for 2024

If all stays the same this year (I am sure it won’t), we should be able to hit that cash saving goal in 2024. That part is relatively easy, as it is taken care of on auto-pilot. However, 3 years’ worth of spending is a good chunk of change, one which shouldn’t sit in an account earning less than 1% in interest. I may have to spend a little more time looking for higher interest returns (online banks, CDs, possibly bonds) to make sure the value of that money doesn’t shrink too rapidly due to inflation.

The next hardest task for this year will be to look ahead to 2024, once that savings goal has been achieved.

What will we focus on next? Deciding whether we will actually put an addition on the house to let us stay here safely when mobility declines? Buying that nearby condo to live in while the addition is built? Throwing money back into the stock market, possibly lamenting that we didn’t put more in during the lows of 2022? Or just plain old retiring?

Luckily, I have the whole next year to figure that out.

Do you set money goals for the year? If yes, what does your process look like?