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Article Submitted by:  Jean Keener - Keener Financial - 817-993-0401

When you're tracking your financial progress, a lot of people focus on how much they make. If their income keeps going up, they feel like they're improving their financial situation. But in reality, how much you earn has very little to do with your overall financial health. You can easily spend every dime you make and then some.

Of course, no financial metric can measure the truly important things in life like happiness, relationships, and purpose. But in measuring financial progress, the number that matters is your net worth.

Tracking your net worth over time provides an accurate indicator of whether you're spending less than you earn, creating a safety net for today, and preparing for future financial needs. At the risk of stating the obvious, you want your net worth to go up (unless you're in retirement and spending down your assets). There may be some years where your net worth will take a temporary hit because of a horrendous stock market year, job loss, or other extraordinary expenses. But when viewed over time, you want to see a steadily increasing net worth number.

To figure out your net worth, add up the current value of all of your assets, then add up the current amount of all of your liabilities. Subtract your total liabilities from your total assets. The amount you end up with is your net worth. Assets can include cash, checking accounts, certificates of deposit (CDs), mutual funds, stocks, bonds, IRAs, 401(k) plans, automobiles, and real estate. Liabilities can include debt from credit cards, student loans, mortgages, home equity loans, 401(k) loans, and car loans.

If you are married, take this a step further. List your assets and liabilities under the name of the owner, so you can then calculate net worth values for you, your spouse, and the two of you as a couple.

The first step in the financial planning process should be to calculate your net worth. Once you determine your net worth, you will know exactly what you have and what you owe, enabling you to begin mapping out your financial future. Keep in mind that your net worth constantly changes. As a result, you should calculate your net worth annually and make adjustments as needed to ensure that you are meeting your financial goals.