2016 was quite the eventful year for CoupleofCents. Starting this blog, buying a house, Mrs. Cents quitting work to become a stay at home mom and having our first child.
A lot has happened.
In 2016, our net worth grew by +61,330 dollars and our savings rate was 38%.
Let’s see where this growth came from.
|Source||Change in Net Worth|
|Work Retirement Contributions||+$29,674|
|Roth IRAs Contributions||+$11,000|
|Home Mortgage Payoff||+$4,320|
- Work Retirement Plans: Participating in our company’s retirement plans was the biggest source of our savings last year. This includes my company’s generous contributions as well our own contributions. Now that Ramona has quit her job to become a stay at home mom, our contributions will go down some in 2017.
- Roth IRAs: Maxing out both our IRAs every year is must. Since we moved to a single income household, we will change over to invest in a traditional IRA to maximize our tax deductions.
3. Portfolio Gains: Stocks continue to be on fire. Not sure how much longer this can last.
4. Home Appreciation: Our primary residence appreciated a little over 4% this year. I used Zillow and a similar sized home for sale on my street to confirm our current house value.
5. Home Mortgage Payoff: we financed a home purchase this year with 20% down on a 30 year mortgage. Principal payments totaled $4,320 this year.
6. Renovations/Furniture/New Home Set-up: This was a big expense this year as we bought a new house. We used money we had already saved. Fortunately, we don’t plan to duplicate these costs in 2017.
How to Grow Your Net Worth
Growing your net worth starts with establishing a good savings program.
As the old adage says, “It’s not about what you make, it’s about how much you keep.”
A lot of experts out there suggest saving 10% of your income. I say “meh”… Shoot for 20% as a minimum and see if you can work up to 50%. We are shooting for 40% this year, despite going to a single income household.
Of course savings is not enough. You then need to invest your money to help it grow and beat inflation.
Once you lock down your savings rate and investment plan, your net worth will gradually begin to pick up steam until the money you earn on your investments eclipses the money you are saving each year.
So what you think? Can we all set a goal to increase our savings rate this year?