Grow Your Net Worth By $100 Per Day In 2015

Want to grow your net worth but not sure where to start? I have a bold suggestion for the new year:

Grow your net worth by $100/day, for a total of +$36,500, in 2015

It’s a big juicy number. I remember when I didn’t even earn $36K per year, so setting that as a savings goal feels in itself an accomplishment. (Or a sign that I’ve gone mad with greed).

I want to extend an invitation to readers to join me in this endeavour in 2015. If the number is too big for your income, please feel free to adjust accordingly — even half the amount, at $50/day, will result in a net worth increase of $18,250 which is nothing to sneeze at. It is important to grow your net worth by whatever number you can.

Note: I’m using “net worth” instead of savings, because I understand people have mortgages or other debts, and I don’t want to negate any progress you’re making to those financial obligations by pretending it doesn’t count, because when it comes to net worth, it does. You can pledge to devote part or all of this net worth increase to debt repayment if that’s what’s in your best interest financially. The point is only to finish 2015 in better financial shape than you started.

If you’re not sure by how much can afford to grow your net worth, you’ll need to know the following 3 things:

1) Your expected net income for 2015

2) Your total annual essential expenses

3) Your predicted annual passive income on current investments

In order to determine your net income for 2015, you can use a tool like this Canadian Income Tax calculator. For example, if I put in an annual gross income of $90,000 (it is better to underestimate than over-estimate!), I’ll take home approximately $67,000 in Alberta.

I contribute $1,400/mo to a joint chequing account I share with my fiance, and spend about $100/mo on my cellphone, for a total of $1,500/mo or $18,000 per year in financial obligations.

By subtracting my essential expenses from my expected net income, I can expect to have $49,000 available for saving, investing, and spending. Not a bad start to grow your net worth.

Before anyone gets excited and thinks I need to dramatically up my goal, let me remind you I’m being cautious because I’m getting married in the Fall of 2015, and right before that in the summer I’m going on an expensive vacation with my family. These two items alone I’m expecting to cost me about $5,000 each, for a total of $10,000. Additionally, there’s no way I’m going a full year without buying coffee or new clothes — though if you’re up for that challenge, Cait has the tips you need.

In order to give myself a bit more breathing room, I also know I’ll receive over $1,000 in interest and dividends from my current investments. For simplicity sake, I’ll aim to generate at least $1,500 in passive income, which will bring my total required savings down to $35,000 for 2015. It seems manageable, even though it still represents nearly $3,000/mo.

The #1 threat to my plan is whatever the stock market decides to do in 2015.

I currently have tens of thousands of dollars invested in stocks and ETFs, and a bear market year could hurt my portfolio. 2014 was good for me in market returns (with my RRSP growing 17% over a 12 month period) but I don’t have expectations for that year of year. Furthermore industry-specific declines (such as a the current price of oil) can dramatically reduce my returns even if it affects only a small percentage of my portfolio. While the stock market falling doesn’t affect what I can afford to save in 2015, any negative returns will diminish positive contributions I make to my account. On the other hand, if stocks rally, I will have the opportunity to exceed my $36,500 net worth  gain goal.

The #2 threat to my plan is my variable income.

I know my salary and I know how much I expect to earn from interest & dividends, but my variable income is not predictable. I can have guesses and goals and hopes and dreams for what I want things like this website or private consulting opportunities to bring in, but I don’t know any of it for sure. One of my major personal goals in 2015 is to identify and aggressively pursue only the most lucrative earning opportunities that become available to me. Recently I’ve come into the luxury of having more money-making opportunities than I have time to accept, but there is still a big difference between taking on something that will pay $20/hr and something that will net $200/hr. I have to be choosy, because both saying no to too many well-paying opportunities or saying yes to too many under-paying opportunities will keep me from meeting my goal.

But despite the threats there are opportunities..

Being a full-time student for 8 months, and a part-time student for another 2 months, of 2014 means the tax man will go easy on me. Because I didn’t work full-time for the majority of the year, this won’t matter too much, but it will mean I get an income tax refund instead of an amount owing when I file my taxes in 2015.

Furthermore, my employment contract includes a review in 6 months after hire, which coincides with my MBA graduation. It’s not guaranteed, but naturally I’m hoping for a raise when this comes around.

I hope to front-load this goal, and grow my net worth by $20,000 in the first 6 months of 2015.

That will give me time to go gung-ho, and have the hard work out of the way before I burn out. Additionally front-loading savings and investments will mean they’ll produce more interest & dividends for the remainder of the year, and getting the bulk of this BHAG out of the way by June 2015 means I can enjoy my August vacation and my October wedding without worrying about money.

I’m not into making daily transfers of $100 to my savings account, so I’ll be managing this goal on a weekly and monthly basis (I’m paid only monthly, but I collect dividends and variable income more or less weekly).

I will provide quarterly updates to let you know how far or ahead I am on or around March 31, June 30, September 30, and December 31 of 2015. 

Why are we doing this? To hold on to our money. I had barely pressed “purchase” for an online order of a new Kate Spade bag before it occurred to me that I may be enjoying my new income a little too much. I am not against spending, but I am not working my butt off to having nothing in the bank.

Moving $36,500 out of spending and into savings is just enough to hurt without making me feel poor.

It’s enough to force me to think about purchases, and to create a budget. It’s enough to make me go the extra mile to choose my investments strategically. And with my essential bills coming in at $18,000/yr, it’s the equivalent of a two-year emergency fund socked away for safe-keeping.

I like the idea that I can save enough in 1 year to pay all my bills for 2.

Make hay while the sun shine, kids. We’re trying to get rich here.