Monthly Net Worth Growth Rates
I have been pushing myself pretty hard recently, trying to make sure I stay ahead of the life changes coming my way to reach my financial goals. I know there will be reduction in our ability to save a large percentage of our income as my fiancee and I settle down and perhaps start a family in the near future. I want to make sure I am stretching myself now, so we won't have to stretch so much later when we likely won't be as flexible.
The situation is a little depressing for me. My job income is such a large percentage of my/our total income that I am making little progress developing multiple streams of income in the grand scheme of things. For instance the alternative income (my job income excluded) is less than 10% of my total income. This is a key metric I need to use going forward to make sure I am on track to financial freedom.
However, I started looking at the performance of my monthly net worth growth since I started this blog. I charted the monthly net worth % change each month since I started this blog and a 4 month moving average (explanation in a moment):
Not too shabby - I am clearly averaging a 3%+ monthly net worth growth since I started measuring my progress on this personal finance blog. The 4mo moving average really hits it home - over any 4 month period I have never averaged less that a 2% monthly net worth gain.
Here is the exciting part - lets extend these monthly growth rates out and presume I can maintain a 2-3% monthly growth rate over the next couple years. I think 3% is a stretch because my income won't be able to keep up, but I think a 2% average net worth growth is achievable.
This is pretty uplifting. If I can average a 2%-3% growth rate, I'll hit my financial freedom goal of $2 million within the next 5-7 years. This is well ahead of my orginal targeted growth rate to reach my net worth goal by the age of 45.
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