As stated elsewhere on this blog, my goal is to have a networth of Ksh. 15m by the age of 40
First and foremost, it may be useful to define what constitutes networth so that we all know what’s being measured. According to one online resource, networth is defined as:
The value of total assets minus the value of total debt. Assets include checking and savings accounts, bonds, stocks, real estate, vehicles, and retirement accounts. Debt is money owed to creditors, such as mortgages, other loans, and unpaid credit card balances.
Now that we have established that it is nothing more than a fancy way of defining the difference between what you own and what you owe, we can apply it to my specific circumstances. I personally chose to treat as assets what i own in:
- Bank balances
- Stocks
- Sacco savings
- Pension (both company and own contributions)
- Cash in hand
I deliberately opted to omit the value of my car and household goods in my networth calculations because (a) my car is a old model point A to point B type of automobile and (b) it is too subjective to put a value on my sofas, beds and fridge. Maybe when i own expensive paintings and a 5million bob luxury car i may be persuaded to include these in my networth.
On my liabilities side i include:
- Bank Loans
- Sacco Loans
- Credit Card balances
- Any other debt whatsoever
I would have put my HELB loan (student loans) here but i luckily finished repaying that sometime ago (story for another day that one). I am carrying very little debt at the moment due to a conscious decision i made to avoid debt like the plague (except if it is helps generate more income for me). Am hoping to pay off all remaining debt this month and hopefully not incur any additional debt.
As at the end of May my networth was a healthy Ksh. 1.57million, roughly 10.7% off my 15×40 Goal or 39.5% off my medium term goal of Ksh 4m by end of 2010. I still feel that am on track to achieve the goals that i have set out for myself.
My Emergency Fund goal is coming along well at 44.7% achievement towards saving 6months of living expenses by the end of the year. Am also pleased to see that i will be hitting my goal of having a stock portfolio at the Nairobi Stock Exchange worth half a million by year end, being currently at 70% achievement. However, plummeting prices significantly impacted my portfolio this year and it almost tear inducing at times. Nonetheless, am am in this for the long term, am not letting this worry me too much and continue to build on my portfolio each month. Am also continuing to build on my Sacco savings at 41.7% achievement. My pension continues to grow at a steady pace and is a good example of the “Pay Yourself First” principle that is the cornerstone of personal finance and wealth building.
At the end of June i will do another review of my networth to see how am doing.
My Road To Wealth 