Essential for Early Retirement – A Networth File

Yes, there are no short-cuts, no easy one-size-fits-all solutions. But for anyone even remotely considering early retirement, I don’t know how it would be possible without a Networth File.

Your networth is simply the sum total of all your assets minus any liabilities (debts) you have. When I am discussing with people, I find that most are well aware of the concept of Networth. But when I pointedly ask them if they have a networth.xls file and whether they track it regularly, the answer is almost always No.

I don’t understand this reluctance given how essential and easy it is to track.

It could be tracked in a notebook, I suppose. Though tracking it in a spreadsheet (Excel) would be a lot easier. If tracked once a month it definitely won’t take more than 15 minutes to update. (There are automated web tools available, but I am old school enough to think that typing each number by hand helps you think about them.)

If your total networth is not growing steadily at the rate you want it to, that will force the right set of actions – increased savings, rebalancing to the right asset allocation mix for your age/circumstance, and perhaps even a job change.

If early retirement is a real goal, I cannot think of a more worthwhile activity than tracking networth regularly.