I will grow my Net Worth by at least 2% month-on-month and by at least 30% year-on-year. I will grow my Financial Independence Portfolio by at least 3% month-on-month and by at least 50% year-on-year.
With respect to my personal finances, I primarily track two key performance indicators:
- The Percentage Change in my Net Worth and
- The Percentage Change in my Financial Independence Portfolio.
This year, I’ve managed to keep both indicators positive but didn’t really fix a target. But in 2011, I want to meet or exceed the targets that I’ve mentioned above. It’s going to be a real challenge!
I compute my Net Worth as being equal to the Cash equivalent of my liquid-able Assets minus the Cash equivalent of my Liabilities (note: my Net Worth includes my car but not my home). I compute my Financial Independence Portfolio as being equal to the sum of my Passive Income Portfolio and Investment Portfolio. And yes, my Financial Independence Portfolio is included in my Net Worth.
These percentages are auto-computed on my personal finances spreadsheet; I update the numbers behind these computations once on the 15th of each month and again on the last day of each month.
Other than these, the only other factor that I look at is that my free cash flow should be positive each month.
How about you? What are your benchmarks for your personal finances?