The Subtle Art of Updating Your Net Worth and Not Giving a F*ck
Last night I started writing my first net worth update.
Like many people I’ve hesitated because it feels very personal. But like people say, personal finance is personal 😉
I decided to share in the end because I find it really interesting and helpful to see how other people have built up their wealth, particularly when they are at the early or “boring-bit-in-the-middle” stages of their FIRE journey.
But by the time I crawled into bed I hadn’t made much progress with the blog and had been spending most of my time fiddling about with my graphs. I was feeling quite low and anxious about the fact that I hadn’t seen much progress with my net worth either in the last couple of months.
To explain, my net worth usually goes up about £4-5000 each month but since going down to four days a week, having a few expensive months and seeing the stock market go down it has started to plateau and this is the third month that it has been at this level.
It felt wrong to let the exercise of tracking my net worth, which I used to find satisfying, get to me. It was bothering me until this morning when I decided not to care so much about it, and the title of this blog popped into my head, inspired by the book by Mark Manson (affiliate link).
What do I mean about “not giving a f*ck”?
Well, firstly, what do I not mean?
I don’t mean that I don’t realise what an incredibly fortunate position we are in to be able to cover our costs, and build wealth. I do.
Even in the months when we see a plateau or a dip, we are not slipping further into debt.
Although I put effort into creating financial stability for our family, I’ve had a lot of help along the way and many people have needed to work far harder than I have to be in a similar position.
So when I say that I don’t want to give a f**k, it means that I want to be grateful and content, first and foremost.
Secondly, it also doesn’t mean that I am not using the exercise to see where I can make improvements and then take action on it. I am. For example, when I see that on my new salary I am struggling to meet my usual savings and investment goals I know that I need to up my game to find additional ways to meet those goals. So what am I planning to do differently?:
- Thinking more about how I can increase my main income, either through a better paying job, retraining or going freelance. This means understanding what’s holding me back and what I need to put in place to be able to take action.
- Keep focussed on new ways to decrease my living costs. This month I am going to shop around for a better car insurance deal. Last year I let it auto-renew because I was feeling stupid about the accidents we had had and didn’t want to be reminded of them. So I ended up paying an extra £100 a year – how much more stupid did I feel then?
- I am going to keep letting go of things that I don’t need and sell them so that I can put the money towards using our sinking funds and Stocks and Shares ISA allowance
- I am going to transfer some of our cash ISA (which we use as an emergency fund) over to our Stocks and Shares ISA so it can work for us. I am only comfortable doing this because we have built up the same amount that I’m transferring in our current account, so the total emergency fund remains the same.
- I am going to keep working on my side hustles, knowing that the time I put in now will pay off in the long run.
So, what DO I mean about “not giving a f*ck”?
For me, this means tracking my progress without feeling emotionally attached to it.
Easier said than done, I know. For me, one of the reasons that I do tend to get attached to it is when my focus on FIRE becomes an escape, or a promise of freedom. I do feel trapped sometimes by my job, my lack of time, my lack of autonomy, but I’m realising that those are things I need to accept and work on, rather than try to escape.
Maybe if I were ten or twenty years younger, a higher earner and single it would be just fine for me to be passionately pursuing FIRE. The journey would probably be shorter and I wouldn’t be surrounded by a family who I want to treasure my time with now and who need me to be present.
It’s a “subtle art” because there’s a balance between feeling invested enough to take action, and staying zen when you don’t see the numbers you want.
At this stage in my life, I’m tracking my net worth as a tool to make improvements, but I’m also very aware that there are so many variables that it would be silly to try to predict if and when I’m going to reach FIRE through it.
It’s information to tell me if I’m going in the right direction (i.e. giving myself a bit more stability, a few more options) rather than something to send me to sleep feeling proud or worried.
What’s actually more important for me right now in terms of improving how I’m spending my “life energy” and the return I am getting for it is looking at how to work in a more flexible and fulfilling way.
Net worth isn’t everything: What’s in my number?
It also means realising that my net worth isn’t a full reflection of our financial situation.
I’m in the camp that doesn’t include the value of their house in their net worth or FIRE numbers as it’s not (for me) an income producing asset and selling my house isn’t part of our plans.
I don’t include the value of our car or any household items because they depreciate pretty quickly and, again, we rely on them so are unlikely to sell them for the money.
I do include my company pension in there, even though I can’t access it until I’m in my late fifties. My partner does have a pension but I’m not set up to track it yet so I don’t include it. I realise this is a bit sloppy but he doesn’t actually put much into it and I’ve given up trying to convince him to do it.
Also, although I am slowly chipping away at our mortgage through overpayments of £110-250 a month, this isn’t reflected in our main net worth calculation.
An overview of my net worth
So, if you have got this far and are interested in our net worth it is £424,000 this month.
|Cash in current account (includes some of our emergency fund)||£9,500|
|Cash ISA (rest of the emergency fund)||£20,850|
|Equity in buy-to-let property||£244,000|
|Workplace pensions (mine)||£99,000|
|Stocks and Shares ISA (mine)||£47,850|
|Stocks and Shares ISA (partner’s)||£2,500|
It is mostly made up of the equity in our rental property which we were paying off (and even overpaying) before we got an interest-only mortgage on it.* When we bought our house we were able to keep the flat that we had before to turn into a rental property because we used some inheritance towards the deposit for our house. I’m very aware that this has been a huge factor in the progress we’ve been able to make.
Our biggest room to grow our wealth is through investing up to £40,000 a year (between us) into our Stocks and Shares ISA. We are on track to fill mine this year (£20,000) and about half of my partner’s. My partner only opened a Stocks and Shares ISA (with Vanguard) recently which is why his balance is lower.
I’m putting 10% into my pension and my employer matches this. Now that I’ve gone down to 4 days a week my pension is a few hundred pounds less a month, so I may increase my contribution to 15% in the Spring (only 10% will be matched).
Our financial situation will be quite stable for the next six months, meaning we should continue to be able to invest but not as much as we did when I worked five days a week. After that, my youngest will qualify for pre-school funding which will give us back about £500 a month.
What does this tell us about our progress towards FIRE?
Not that much.
Based on our LEANish FIRE goal of about £750,000 this means we are about 55% of the way there. However, I’m very conscious our goal is flawed because £2500 a month is more than we’d need if we had paid off our mortgage but not enough if we still had one.
But because there are so many variables we’re keeping it there. We could, for example, downsize so that we could pay off our mortgage sooner, or be smarter with our rental investment so that we can add extra properties and bring in more additional income.
How I track my net worth
I track my net worth using the Money Hub app and every month also fill in a spreadsheet that shows me my progress towards my goal of having £750,000 and also tracks another net worth figure that includes our main property equity and shows us how much we have paid off. All the numbers!
For added measure, I also have a big wall chart (that I keep under our bed for balance!) where I plot out our progress.
I am writing this to share the mindset that is working for me at the moment, not to suggest that this is the only, or the best way to approach FIRE.
It’s possible that my net worth will go down next year if I follow through with some of my plans so it’s important this it’s not my main measure of success, just one tool that helps me to make improvements.
*For more of our learnings in our 5 years as landlords, see here.
My Stocks and Shares ISA is with Interactive Investor. For an honest review of the platform (and a referral to save the first year’s fees of £120) see here.