Financial Readiness
One number that tells you whether you are moving forward. Track the trend, not the snapshot.
Soldiers conduct the Sprint-Drag-Carry event of the ACFT, Romania, Oct. 25, 2023. U.S. Army Reserve photo by Spc. Andrew Mendoza, DVIDS (public domain).
Net worth is what you own minus what you owe. One number. Add up your assets, subtract your debts, and that is it.
Treat it like a PT score. Where you sit today matters less than which way the number moves. Starting negative early in a career is normal. Check it once a quarter and work to move it up.
Two lists and one subtraction. Add up everything you own, add up everything you owe, then take one from the other. The answer is your net worth.
Assets, what you own
Liabilities, what you owe
Assets minus liabilities = your net worth. One number.
Source: DoD Office of Financial Readiness (FINRED)
Assets are what you own: cash, savings, your TSP balance, and the resale value of your car. Liabilities are what you owe: the car loan, credit cards, and student loans. Subtract liabilities from assets and you have your net worth. FINRED, the DoD Office of Financial Readiness, has a free Personal Net Worth Tracker that walks you through building this statement.
The trend matters more than the target. A negative net worth early on, with a car loan and not much saved, is common and not a character flaw. There is no single figure you must hit by a certain rank. Chasing someone else's number is a distraction. Watch your own line move up.
Once a quarter is plenty. Run it like a PT test, the same way each time. Pick the same day each quarter: the start of January, April, July, and October. Same method, four times a year.
Your net worth is a financial PT score. The single read tells you less than the direction it moves. Run it the same way every quarter and pull both levers to move the line up.
4x
Check it quarterly, like a PT test. Jan, Apr, Jul, Oct.
Win in progress: Negative early on is normal. A negative number that climbs each quarter is a win in progress.
Two levers, pull both
Financial fitness in one metric.
Source: DoD Office of Financial Readiness (FINRED)
There are two levers, and you pull both. Grow your assets by building savings, contributing to your TSP, and keeping an emergency fund. Shrink your liabilities by paying down debt, starting with the highest interest. Every extra dollar saved and every dollar of debt knocked out moves the line the same way.
You do not have to track this alone. FINRED, the DoD Office of Financial Readiness, offers a free Personal Net Worth Tracker to build your statement. Military OneSource gives every service member and their family free financial counseling at 800-342-9647. Your installation Personal Financial Manager will also review your numbers at no cost. All are linked in Sources below.
Does my TSP count?
Yes. It is an asset you own, even if you cannot spend it now.
Should I count my car?
Count its realistic resale value, not what you paid. If you owe more than it is worth, that gap pulls your net worth down, which is useful to see.
My net worth is negative. Is that bad?
Not necessarily, especially early on. What matters is whether it trends up over time.
