In this edition of Women and Money Series I’m excited to share a guest post by a fellow blogger and personal friend – YP from The Home CFO. She will be sharing her journey of how she achieved her family’s financial freedom by tracking her net worth.
I first got to know YP during a CPF appreciation lunch as a fellow financial blogger. Back than we were the only two female CPF bloggers so we instantly hit it off and became friends. Our friendship deepen when I took up yoga classes with YP and she became my client as well.
When I shared with her about the Women and Money Series, she was very supportive and shared with me her personal journey to financial freedom over the past 15 years.
Her story is an inspiration to me, she showed me it is truly possible to reach financial freedom – by taking the first step and staying the course with faith. I hope her sharing will also inspire you to take charge of your finances this year and create the future you desire!
Please give YP a warm welcome, enjoy and share!
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By YP
The worse that one can do financially is nothing.
I can say this because more than 10 years ago, my husband and I were talking about working towards financial freedom, but we well, just talked, and did nothing much.
The eureka moment came when I was attending a Basic Financial Management course as part of job training. I couldn’t help but ask myself why I was learning how to read other people’s financial statements, but failed to set up one for the most important company I keep – our own household.
An idea kept me distracted during the training. What if I gathered all our assets and liabilities and calculated our own Net Worth figure? How much really are we worth in terms of dollars and cents, minus all our debts and liabilities?
Frankly, like most people, part of me wanted to give up before I even started. It was just too complicated, too tedious, and I was too busy with two toddlers vying for my attention.
Worse, what if I did go through the sums and the end result was one big negative number?
That got me worried. Really worried. So much so that I didn’t dare hesitate anymore.
I figured it’d be better to know now than later, whatever the outcome!
I couldn’t wait till the next tea break at training, when I hurriedly scribbled down a rough outline of my net worth. Next was the headache of finding out the sources to get the numbers I needed. Mind you, those were the days before online banking and statements, so it was not exactly a piece of cake.
I divided the net worth into both liquid and non-liquid. Under Liquid assets, I have “Cash”, “Bank balances” and “Unit Trusts” and “Stocks”. I dug out our latest available paper statements and plugged the figures onto a simple excel spreadsheet. For Illiquid assets, I included CPF (both mine and my husband’s), our net property and insurance values.
Getting the latter was more tiresome. I had forgotten my Singpass then and went through a reset process before getting a printout at the CPF counter. As for the net property value, I checked out on average property values and deducted our outstanding loan value to get the final figure. Value of Insurance policies needed some assumptions, so I assumed a net cash value.
I tried to get the Husband involved. But in the end, I had to do almost all the legwork myself. He was too busy with work. Well, aren’t we all? But someone’s got to do it.
Finally, on 13 Feb 2003, our first net worth chart was born.
On seeing that our net worth was positive, both my husband and I heaved a joint sigh of relief. With the data already at hand, all it took were a few more ratios to make the table even more useful.
I added in ratios for the following: liquid and illiquid assets to net worth, net gain/loss for stocks and unit trusts, debt to net worth. That’s when we realised we were like most households: asset rich and cash poor. Majority of our net worth came from our illiquid assets. That was a huge red flag. And our unit trust investments were performing really poorly!
My husband and I had earlier already set up a Goose Account, named after the goose in the famous Aesop’s Fable. “Never ever kill the goose that lays the golden egg” – so every dollar that goes into the Goose Account can only be used for investments and absolutely nothing else. We decided to increase the proportion of our monthly salaries that went into that account. The net worth table gave us a tool to track how the Goose account was performing.
One thing led to another. We also set net worth targets for every 5 years. The ultimate one was to have the ability to retire by the age of 40.
I still keep that first rudimentary spreadsheet to today. Every month for the past 14 years and counting, I would open a new tab and did up a net worth table for the month. All the monthly data was plotted on a bar chart. I would then email the updated spreadsheet to my husband, and using that, we discussed and tweaked our financial goals and investments. This very simple habit of keeping track kept us going on our path to be financial free.
It guided us to make better decisions on whether to upgrade to a new car or stay with a used one, remain in our HDB flat or buy a private property, and whether I could quit my job and work part-time at home to take care of the children.
It took me more than a decade to fully appreciate the saying that goes,”We often overestimate what we can do in a year and underestimate what we can do in a decade”. And today, I am proud to say we have achieved our goal to be financially free. All because I was curious to know our net worth.
Now, if you’re curious to find out yours, things are a lot easier nowadays with online access to statements. There are also ready samples of networth tables online. Or you could simply contact your financial advisor to lend a hand.
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YP’s financial freedom journey started with her being curious about her net worth picture.
If you too are curious about your financial health, contact me at info@yonghui.sg for a complimentary financial health check to uncover your net worth and cash flow picture and find out how to start building up your Goose account.
To Your Success and Happiness,
Yong Hui
