--- name: "net_worth_tracking" description: "Track net worth over time with a clean asset and liability register, valuation rules for hard to price assets, monthly snapshot discipline, and an honest read of the trend. Ships a register template, a tested snapshot worksheet that computes net worth, liquid net worth, ratios, and a line by line change decomposition, valuation rules for homes, vehicles, private businesses, collectibles, and retirement accounts, and a guide to splitting a change into flows, market movement, valuation updates, and method changes. Use when someone wants to calculate net worth, start or fix a net worth tracker, value a home, business, or collectible for a personal balance sheet, compare net worth across months, or explain why net worth moved." --- # Net Worth Tracking ## Purpose Net worth is total assets minus total liabilities. The formula is simple. A tracker that stays honest for years is not, because the hard parts are valuation, consistency, and reading a change without crediting saving for what the market or a new estimate did. This skill sets up a register that can be snapshotted monthly, values each line by a stated rule, and reads the trend by decomposing it. It covers an individual or a household. It does not give investment, tax, or legal advice, and it does not replace a formal valuation where one is required, for example in a divorce, an estate, or a loan application. ## Workflow 1. Settle the unit and the scope before any numbers. - Record whose balance sheet this is: one person, or a household treated as one unit. Joint and separate lines must be labelled so the same asset is never counted twice across two registers. - Record the currency. Convert foreign currency lines at the rate on the snapshot date and record the source of the rate. - Agree the headline policy choices up front and write them at the top of the register file: retirement balances at full statement value with tax status noted, or tax adjusted; ordinary household property excluded; contingent debts on a memo list only. See references/valuation-rules.md. 2. Build the register. - Generate the starting template with `bin/networth.py template > register.csv` and replace the example rows with the real lines. - One row per account, asset, or debt, with columns: name, kind (asset or liability), category, value (positive, kind carries the sign), liquidity (liquid or illiquid for assets), method, as_of date, and note. - Cover, at minimum: cash accounts, brokerage and other investments, retirement accounts, home and any other real estate, vehicles, any private business interest, and every liability: mortgage and HELOC, auto and student and personal loans, credit card balances, taxes owed, and other amounts due. - Keep a memo list under the register for items carried at zero in the headline: collectibles without comparable sales, contingent debts, and anything excluded by policy. A memo item is visible and explained, not forgotten. 3. Value each line by its rule, not by feel. - Apply references/valuation-rules.md line by line. The standard is fair market value: the price agreed between a willing buyer and a willing seller, neither required to act, both reasonably informed. - Use statement balances for accounts, market close for securities, comparable sales for a home, private party resale for a vehicle, and documented evidence for a business interest. - Never use purchase price, insurance or replacement value, or tax assessment as a stand-in for market value. The bundled checker flags those methods on illiquid assets. - Record the method and the as_of date on every line. A value with no method and no date does not go into a snapshot. 4. Take the snapshot on a fixed discipline. - Same day each month, end of month is the common choice, with every line valued as of that date or the closest statement date before it. - Run `bin/networth.py check register.csv --snapshot-date YYYY-MM-DD` first. Fix every problem it reports. Treat stale warnings seriously: a line valued more than 45 days before the snapshot date needs a refresh or a written reason. - Run `bin/networth.py snapshot register.csv --expenses --annual-debt-payments --gross-income ` and save the output with the date in the snapshot log. Never edit a saved snapshot. An error is fixed by a restated snapshot labelled as a restatement, with the change bucket marked as a method change. - Record flows for the period beside the snapshot: contributions and withdrawals per account, and debt principal paid beyond scheduled payments if tracked. The trend read needs them. 5. Report the snapshot in full, not just the headline. - Report total assets, total liabilities, net worth, liquid assets, liquid net worth (liquid assets minus all liabilities), and the category totals from the tool. - Report cash months and liquidity months when expenses were supplied, and debt to assets and debt payment to income when its inputs were supplied. Use the bands in references/reading-the-trend.md and name them as guides. - A positive headline with a negative liquid net worth is a normal, reportable result for a homeowner with a mortgage. Say both numbers plainly. Hiding the liquid figure is how a tracker starts flattering its owner. 6. Read any change by decomposing it. - For a comparison, run `bin/networth.py compare old.csv new.csv`. The line effects sum to the total change. Confirm that they do before writing anything. - Classify each material line as a flow, market movement, a valuation update, or a method change, following references/reading-the-trend.md. A mixed line with no flow record is labelled mixed and unsplit. - For spans over a year, add the real change using CPI values sourced from the BLS at the time of the report, with `bin/networth.py real --cpi-then --cpi-now `. State the CPI months used. No sourced CPI, no real figure. - Compare to the household's own earlier snapshots first. If an outside comparison is wanted, use the median, not the mean, from the current Federal Reserve Survey of Consumer Finances release, and cite the release and table. Never quote a remembered benchmark figure. ## Output Contract - A register CSV in the template format, with a method and an as_of date on every line, plus a memo list for zero value items. - A dated snapshot record: totals, liquid totals, category totals, ratios with their inputs, and the period flow record. - For any change report: the decomposition table from the compare tool, each material line classified into flows, market movement, valuation updates, or method changes, and the sum check shown. - Worked example, from the bundled template, verified with the tool: assets 587,000 (cash 24,000, brokerage 45,000, retirement 120,000, home 380,000, car 18,000), liabilities 266,000 (mortgage 240,000, car loan 9,000, card 2,000, student loan 15,000), net worth 321,000, liquid assets 69,000, liquid net worth minus 197,000, invested share of net worth 0.514. At 4,200 in monthly essential expenses, cash months are 5.71 and liquidity months are 16.43. The next month, savings up 2,000, brokerage up 3,000, mortgage principal down 1,200, and the card paid to zero give a change of plus 8,200, split by the compare tool into asset growth of 5,000 and liability reduction of 3,200. ## Operating Rules - Consistency beats precision. A slightly rough value taken the same way every month produces a usable trend. A precise value taken a different way each month produces noise. - Every factual claim about a definition, a ratio band, or an inflation figure must come from a source checked at the time, such as IRS Publication 561 for fair market value, the Federal Reserve Survey of Consumer Finances for population figures, or the BLS for CPI. Unverifiable figures are left out, not rounded into confidence. - Legal definitions are not the headline method. The SEC accredited investor standard, for example, excludes a primary residence and most of its mortgage. That is a rule for a specific legal test. Do not import it into a household tracker, and say so if a user asks to. - No spending, account access, or data sharing is part of this skill. Work from figures the user supplies or reads from their own statements. - Keep the register private by default. It is a complete map of a household's finances. Store it where the user keeps financial records, and do not paste it into third party tools or messages without the user's explicit word.