Why track net worth
Net worth is the single best one-number summary of your financial situation. Income measures cash flow but not wealth, savings rate measures behaviour but not outcome, net worth measures outcome over time. Plot it quarterly and you see whether your choices compound positively.
How to value each line item
- Cash and M-PESA: current balance
- Savings: bank account balances plus SACCO front-office balance
- Investments: market value of NSE shares, money market fund balance, treasury bill face value
- Property: realistic resale value (not what you paid, not what you hope it sells for, the price you would actually accept today)
- Vehicles: realistic second-hand value, not insured value
- Loans: outstanding principal, not original amount
- Credit cards / mobile loans: current balance owed, including any Fuliza outstanding
What to do with the result
A negative net worth means you owe more than you own, common in early career and during a mortgage. Track the trend, not the absolute number. If net worth is rising over a 12-month period, your behaviour is working.