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Online Tools for Calculating and Tracking Your Net Worth
Last week, I created a post that included some video describing how I create and update a spreadsheet to keep track of my net worth. I find a simple spreadsheet to be the most powerful way for me to monitor my net worth. Of course, I understand that not everyone is exactly like me (probably a good thing) and that others will not find the same method as useful.
In the short life of BFN, I’ve already stated multiple times the importance of using net worth to track how healthy your finances are and what their current trend is. Today, therefore, I thought it would be helpful to list some other methods for tracking net worth. These methods are all online (so no Quicken or MS Money) and all free (thereby precluding Quicken online, for instance).
Simple calculators
Calculating your net worth is quite simple as long as you have all the data – it just requires some simple addition and subtraction. You can easily find myriad calculator choices using a simple web search. Type in something like "net worth calcuator" and results will be displayed such as CNN’s calculator and Kiplinger’s calculator.
Though these are straightforward and easy to use, I don’t feel that they are as useful as other tools. Simply calculating your net worth will not provide you with historical data and allow you to see how your finances are behaving over time. If you are going to calculate your net worth periodically and save the data somewhere, then you might as well use a spreadsheet .
Online Net Worth Tracking
The first site that comes to mind when I think of online tools to track net worth is NetworthIQ.com. NetworthIQ is a "social personal finance manager" that lets you "track, share, compare" your net worth with other users. You periodically enter your assets and liabilities to keep track of where you are financially and where you’ve come from.
The unique feature of this site is the ability to compare your net worth with other users. You can search for other users by age, income, occupation, education, etc. This allows you to see how your net worth compares to others earning your same salary, or in your same occupation, for instance. As an option, you can select to share your financial picture with other users of the site as well.
Online Net Worth and Transaction Tracking
While NetworthIQ focuses on your net worth, other online tools go beyond net worth to include a more complete financial picture. These tools allow you to aggregate all of your various account information (checking, savings, credit cards, loans, etc) into a single application. Of course, it calculates net worth but will also give you more detail on exactly how you are spending your money on a monthly basis. A very nice feature of these sites is that once you configure all of your account usernames and passwords, updating your net worth each month requires nothing more than visiting the site and clicking the refresh or update link. The site then automatically visits all of your account sites and collects your up-to-date account information.
The three most prominent sites that I have found are Yodlee , Geezeo , and Wesabe . They are somewhat similar in how they work and the data they collect and display. Each has the capability to calculate net worth, display categorized monthly expenses, and provide budgeting capability. As I see it, there are two main differences among the three sites.
First, Wesabe and Geezeo integrate a social component into the site. You can share information with other users, you can ask for tips and information, and you can see what others have done in similar situations. This can be very powerful in assisting you to create and stick to your financial plan.
This feature can actually be good or bad, frankly. Allow me to relate a story (or just skip to the next paragraph and I’ll never know the difference). When I first found out about Wesabe, I was so excited about it. I thought it was going to be a fantastic tool to really optimize my finances. I created an account and put in my first main goal as getting rid of my student loans. Wow, it was quite disillusioning when most of the comments pertaining to that goal were about how it was stupid to worry about paying off student loans. ("good" debt and low interest rate and all of that). Honestly, I haven’t been back to that account since then.
The second main difference is found in the way security is handled. Security is obviously of paramount importance when you’re talking about usernames and passwords to all your financial accounts. For Geezeo and Yodlee, you upload your account information to their servers. Wesabe is a bit different, though. As I understand it, you download some software to your computer. That application stores your account information and transfers your account data to your computer and then up to the Wesabe server. In this manner, your account information is never uploaded to the Wesabe servers and that presents one less security risk.
Seriously, the security of your personal financial information is of critical importance. Before you disclose any of it to any of these sites, it is very important you investigate exactly how they collect your data and how they protect it so that you feel comfortable providing the information.
Your bank may offer a similar feature
Another place to look for a net worth tracking feature is your bank if they provide online banking. I have my main checking account at a "brick and mortar" bank that also has a good online banking component. Integrated into the online banking site is an application similar to Yodlee (I think it actually is Yodlee). I can add the accounts not held at my bank and use this tool to calculate net worth and track monthly expenses just like in Yodlee. If you are looking for an online tool to calculate net worth, this is something to investigate. If you are using it, your online banking site already has some or most of your financial information. So, if you can get the desired functionality there, it doesn’t make sense to unnecessarily upload your financial information to another site.
I’ll stick to my spreadsheet
My advice to you is to track your net worth. If you’re still listening for more advice, my next piece is to use a spreadsheet. Of course, if you want to utilize some of the transaction tracking and categorization features or social networking aspects, then a spreadsheet won’t be of much help to you. On the other hand, there are no security issues with the spreadsheet as it is on your computer and does not contain your account information anyway. Furthermore, a spreadsheet can be configured in a very powerful manner to allow you to pull more information out of your net worth updates rather than just the bottom line net worth number.
I am considering using the Yodlee-like feature of my bank to automatically update my financial information each month. I will then transfer this information to my spreadsheet. Using the tool in this way may save me a little time each month and allow me to look at the current status throughout the month.
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