A reader asked Walter Updegrave, “are my finances on track?” He says there are two ways to determine how you are doing. Go to Money’s Net Worth Calculator, use Census Bureau statistics, or use NetWorth IQ. This will compare your standings to others or determine if you are “keeping up with the Joneses.”
Updegrave says that comparing yourself to others isn’t the best way. It’s very difficult to perfectly match yourself against similar people. And that it’s hard to find reliable and consistent data. But you can get a sense of where you stand.
A better measurement is looking at where you are compared to where you’ve been. I have to agree. How secure financially you are. It doesn’t really matter where you are compared to others. What matters is how you stack up against you 1 year ago or even 1 month ago.
He says you need to ask yourself are you saving regularly? Do you have an emergency fund? Do you have a plan for investing your money? Do you have goals for buying a house or having children? Do you need to save cash for those shorter term goals?
I think that measuring against yourself is the best way. It works for me. I know we’re behind in savings both retirement and taxable accounts for people our age. I also know because we delayed children we should have a lot more than we do. And it is frustrating to measure ourselves against people our age.
So I have to think positively and compare us to ourselves. One year ago May 2007 we had $56k for retirement, in May 2008 we have $95k. We spent however $12k in cash from 2007 to 2008 (probably tuition), but we also decreased our mortgage from $446k to $438k. So we’ve improved, same with going back to May 2005. We had $2k retirement, and starting mortgage of $460k, and no savings. So we’ve come very far from where we were.
We’re not financially secure, but we’re making progress. We’re on the right track. And that’s the most important thing. We’re better than where we used to be.
5 responses so far ↓
1 JB // Jun 25, 2008 at 5:08 pm
Yes – exactly! You are moving in the right direction. What good is comparing yourself to others? That comparison means nothing. A favorite quote of mine from the sunscreen song….
“sometimes you’re ahead, somtimes your behind… the race is long, and in the end, it’s only with yourself”
2 Rick // Jun 25, 2008 at 7:51 pm
How old are you and where do you live?
3 FruWiki Meg // Jun 26, 2008 at 6:50 pm
When I compare our finances to others nationwide, I want to cry because my husband and I are most certainly in debt. However, at least compared to our friends, we have more things to show for the debt we have (even if it is higher) and a higher household income with the potential to make a lot more in the upcoming years (I hope).
Yes, we’ve made some bad decisions, but we’ve also made some good ones (and certainly learned from the bad ones). We both have bachelors degrees, we have a house, we have savings and retirement accounts, we’ve been making improvements on the house, we have a vehicle that still works even though it’s time seems to be about up, we have the tools we need to work, and we have a good many long term money savers like a programmable thermostat, a garden, a chicken coop, and even a homemade DVR. There isn’t room for most of those things on a net-worth calculator, but they still do count for something.
But, the important thing is that we track our debt and assets from week to week. And in pretty much every case since we started, we’re doing better — despite necessary home improvements, mini-emergencies, and all sorts of other unforeseen expenses. The road is long, but we’re on the right path now.
4 LivingAlmostLarge // Jun 26, 2008 at 7:15 pm
Exactly. I’m 29 and my DH is 30 (31 in december) and we live in the northeast.
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