Is It Time We Start Calculating Our Net Worth?
Having read Gonzalo Ziadi’s articles on personal finance and net worth, I became inspired to also start writing about my personal journey towards financial freedom and independence. I have been reading his articles for quite a while now but only this time did I think of writing my own “net worth” story.
Situationer
I graduated in June 2015 and started working since then. Unlike people in the states, most students in the Philippines don’t really get buried in loan after college except for extreme cases. Lucky for me that I received some financial assistance back in my university days and so I had no debts when I finished my degree.
With a bachelor’s degree in Chemical Engineering, I was geared up to work engineering jobs and I thought doing so would be financially stable. That’s usually the case but getting started at it isn’t easy.
From 2015 until 2017, I went into three jobs working as a production engineer, a research assistant, and a sales engineer. In between 2015 and 2017, too, I took a break from working for about six months. I had no stable income during that time but I had some cash from doing freelance English tutoring and from assisting in Korean-English translation jobs.
From the time I graduated until the end of 2017, I had no savings. I tried but it didn’t really work out for me. I didn’t develop the habit of saving from when I was a child and I brought that tendency with me even when I was already working. I would earn money and spend it within a month’s time.
I started the year 2018 with a debt amounting to about 500 US dollars. In US terms this debt would be insignificant, but in the Philippines, it is already worth more than an average family’s monthly income. To where do I owe this debt? Well, I had to spend some cash during my six-month break and I also lived beyond my means by having some travel time, RnR and other sorts of vacation.
That’s where I am coming from.
Now, I live with my parents and my sisters in a rented apartment that costs us about 300 US dollars a month including utility costs. My sisters and I do share in this cost so it doesn’t hurt my pockets as much although it still does. At times, I prepare my own food but more than half a time I buy ready-to-eat meals.
Baseline calculations
With Ziadi calculating and publishing his net worth on a monthly basis, I decided I would do the same so as to have a clearer perspective for myself, for my readers, or for those who are in the same age group as me who are struggling to become more independent financially.
Instead of calculating my net worth based on the total amount of money that I have as savings, investment, cold cash, and presenting it in monetary value, I would instead present it with the unit of hourly wages based on my pay rate. Meaning, I would present my net worth as the number of hour wages that I could pay myself at the rate that I am getting paid by my current employer.
I work forty hours a week so that would be about 200 hours a month. If I say my current net worth is 200 hours, that would mean I have a net worth equivalent to my monthly salary.
Net Worth from April to November 2018
From January until March I have been paying my debt and it was only by April that I got into a positive net worth.
This net worth value includes only my emergency fund combined with my savings.
I am subscribed to a VUL (variable universal life) insurance and it is meant to be an insurance and at the same time an investment vehicle. For its first year, however, I am only paying for the insurance premium and the investment part would come in starting from its second year. By the time the investment part make some amount, I would add it up on the charts.
As can be seen on the chart above, I am still very inconsistent with my saving habits. There was a time when I would save a quarter of my salary and then followed by some really low dips afterward.
From October to November, I spent quite a lot on an RnR travel that I’ve been intending to have for quite a while now. I overspent and its effect to my current net worth is very obvious.
Why Calculate Your Own Net Worth
We would usually see the net worth of really rich people published online and we seem so far away from understanding that in getting there a shortcut is almost never available. By writing our own story, by documenting our own journey and calculating our own net worth, we can have a better understanding of how we can linearly or exponentially grow.
We can show other people how we fare with the difficulties in life’s financial decisions. We can learn from each other.
And so, starting this month, I would also do this on a monthly basis and write about what changed in my net worth, what decisions caused what results and others.
This is like an experiment for me and I’d like to see how I’d go from point A to point Z.
If you’ve been reading me for a while now, you would know I have been writing about anything under the sun.
Productivity, self-improvement, travel, personal experiences, poetry, short fiction among others.
From this point on, I would also be writing about personal finance. I don’t know much about this topic so I would be very grateful if this could spark up meaningful conversations.
Thanks for reading!
