A Breakdown of My Net Worth by Category: And Where It Should Be
Although I wanted to own real estate by the time I was 30 (and 30 is not finished yet), I am excited to have no debt as I start my 30s. I’ve been really focused on building a strong financial future for myself and my fiancé, but it is not easy by any means. It feels like a marathon in which they keep adding 1 mile to the race as you get closer: 26.2! No, 27.2! How about 28.2?!
One of the best things you can do for your finances is analyze the crap out of them. Here are a few things I’ve already implemented:
- Writing down everything I spend money on in a daily notebook, then putting it in a spreadsheet at the end of the month,
- Tracking my net worth each month,
- Have a spreadsheet of all of our monthly expenses and make monthly attempts to reduce it, calling the cable company to lower the Internet bill, calling the insurance company every 6 months before the premium is due, etc.
- Finally bought a few ETFs in my Roth IRA and Rollover IRA, on a commission-free basis
One thing I have wanted to do for a while is analyze the asset categories of my net worth. I don’t include my car, computer or personal property in my net worth because I use them and really wouldn’t sell them to get cash out of them. So the categories and percentage of my net worth are:
- Savings account (currently uninvested, earning miniscule interest): 16% of net worth
- Checking account (money flows in and out too quickly to invest, this is for daily living): 0% of net worth
- Roth IRA (Invested in one ETF): 1% of net worth
- Rollover IRA (From all former employers, hold four mutual funds, one ETF, three individual stocks and a little cash): 64% of net worth
- Employer Stock Purchase Plan: 6% of net worth
- Employer 401(k): 12% of net worth
- Individual Brokerage Account (no money in it, yet J): 0% of net worth
As you can see, the majority of my net worth sits in my Rollover IRA. This doesn’t worry me, because I like the holdings that I have in there, but I would like to see the Roth, 401(k), ESPP and brokerage account really start to grow and be the big categories. I also don’t love that I have 16% of my net worth just sitting in cash. I have already decided that after a few more weeks of saving, that money will start going into the brokerage account so it can be invested. Eventually, I’d like my other assets to grow so that my savings is only 5% of my net worth. But I won’t transfer any money out.
I know you guys are super smart and can help me improve my net worth. Where would you focus? What would you change? Would you move any of the cash savings somewhere else? I am PUMPED for some new ideas!