Budgeting
How to Track Your Net Worth and Why It Matters India
Net worth is what you own minus what you owe. It adds useful context to income, but should be read alongside cash flow and access to money.
1. Use a consistent valuation date
List account balances, investment values and reasonable asset estimates. Subtract outstanding liabilities, not just this month's EMI. With ₹28 lakh of assets and ₹12 lakh of liabilities, net worth is ₹16 lakh. Keep the same method when comparing months.
2. Separate liquidity from total wealth
A house, retirement account and savings account may all count as assets, but they cannot necessarily pay tomorrow's bill equally easily. Track accessible emergency money separately. Avoid counting both an underlying asset and a statement total that already includes it.
3. Explain the change
Break movement into contributions, repayments and price changes. A market rise is not proof that spending habits improved. A monthly or quarterly spreadsheet can be enough; protect account details and keep a private backup.