This is partly why I stopped tracking my net worth… it got too complicated. I have a couple of properties that tripled in value according to Zillow, but there is no way to know unless I try to sell… then there are the selling fees which take out a chunk… do I deduct that in net worth? Also, if I use the 3-4% withdrawal rule, the rental income would make the properties at their current inflated value, another double in value, as compared to the money sitting in a mutual fund, but I couldn’t get that if I sold. Additionally, most people probably don’t discount funds that are in a pre-tax account, versus a Roth, where you know exactly what you have, because you don’t have to pay taxes. Plus, should college funds for kids be included in net worth? The home that you live in? Cars? These are all items that different people have very different opinions on. I think tracking net worth is very important, especially in the beginning, but it is not a good measure of comparison to others.
I once read ERE use a different calc… instead of net worth, he calculates how many years he can live off of his funds. This was awhile ago, so I’m sure it is much longer, but at the time, it was 90 years. Granted, he lives on very little.
For me, I am more of a proponent of monthly cash flow. My goal was to create enough real estate income to cover all my basic monthly expenses, which I achieved. Now, I’m focused on inner goals, and not building more net worth. My net worth still increases, but I’m not actively tracking or pursuing, which is the true definition of financial freedom, for myself at least.
Just remember that finances vary sooooo much from person to person, which is why it is so ‘personal’. I know it is hard, but the key is to not compare yourself to others.