The 2×2 System is where you set aside two hours on the calendar two times a month to complete a predetermined financial task. This modest yet consistent effort can help you maintain financial health and build wealth in bite-sized chunks. To view August’s blog on planning for holiday expenses and charitable giving, click here. We hope you find this month’s information on tracking your progress and improving your cash flow beneficial.
September Session 1: Calculate your net worth.
With so many moving parts in personal finance, it can be tough to know where you stand. By calculating your net worth at least once a year, you get a clear snapshot of the progress you’ve made and where adjustments might be needed.
What is net worth?
Net worth is simply the difference between what you own (assets) and what you owe (liabilities). Assets include things like cash, investments, retirement accounts, your home, or even valuable personal property. Liabilities cover items such as mortgages, student loans, credit cards, or auto loans.
Why net worth matters.
Tracking your net worth over time helps you:
- See your financial progress in a big-picture view.
- Identify areas where debt may be holding you back.
- Measure how close you are to reaching milestones like homeownership, retirement, or debt freedom.
Steps to calculate:
- List your assets: Savings accounts, retirement funds, property values, etc.
- List your liabilities: Outstanding balances on loans and credit cards.
- Subtract liabilities from assets: This is your net worth.
Tip: As you add retirement accounts, consider whether there might be money you aren’t factoring in. Many people forget about accounts from old jobs. Reach out to former employers or use one of the national search websites designed to track down lost 401(k) accounts—you may be able to add more to your nest egg than you thought!
September Session 2: Review your insurance needs.
As life evolves, so do your insurance needs. What worked for you five years ago may not provide the right coverage today. Major life changes—like getting married, buying a home, having children, or nearing retirement—are great reminders to reassess your protection.
Key insurance areas to review:
- Health Insurance: Ensure you have the right plan to cover medical needs at the lowest possible out-of-pocket cost.
- Disability Insurance: Protects your income if you’re unable to work due to illness or injury.
- Life Insurance: A safety net for your family’s financial security. Coverage may need to grow as your responsibilities grow.
- Auto Insurance: Check that your liability limits and deductibles make sense for your budget and vehicle value.
- Liability (Umbrella Insurance): Adds extra protection beyond standard policies, especially valuable if you own property or significant assets.
- Homeowner’s/Renters Insurance: Make sure your home and belongings are protected against damage or loss.
Tip: Just as with savings accounts or credit cards, it pays to compare rates annually. Shopping around for insurance can save you hundreds—or even thousands—per year, while also helping you find policies that better match your needs.
Final thoughts.
Financial wellness is about building habits that give you clarity and confidence. By making it a routine to calculate your net worth and review your insurance coverage, you’ll be better prepared for life’s changes and surprises. If you need help getting on the road to financial wellness, consider taking our Financial Wellness Check, visiting our education center, or meeting with one of our Financial Counselors.
We’re here to help you lead your best financial life every step of the way—whether it’s saving for retirement, or simply making sure your financial picture is as strong as it can be.
Thanks to our friends at Balance for these smart tips.
