Should You Bother Keeping Track of Your Net Worth?

It may or may not shock you to learn that the average American has a net worth of $1,063,700, according to data from the Federal Reserve. Median net worth, however, is only $192,900. And when you have a discrepancy like that, it tells us that the median is far more representative of the typical American than the average.

You may be curious to know what your net worth is. And your ultimate goal should be to see your net worth increase. But while net worth is a good thing to keep track of, there are other financial factors you should focus on more.

What's net worth, anyway?

If you're not exactly sure what net worth refers to, it's the difference between your total assets and your total debts. So as a very basic example, let's say you have $50,000 in savings and own a home worth $450,000. That gives you $500,000 in assets. However, if you owe $300,000 on your mortgage and have no other debt, that leaves you with a net worth of $200,000.

Net worth is something you can certainly aim to track -- and increase -- over time. But should you check your net worth daily, weekly, or monthly? That's probably not a good use of your time.

Your net worth can fluctuate frequently based on different factors. Take your $450,000 home, for example. It may be worth $460,000 in a month from now based on market value. And a month or two later, it might fall to $440,000.

Similarly, let's say you have a lot of assets tied up in investments like stocks. Your portfolio might be worth $190,000 one day only to fall to $186,000 just a day later. And then, a few days after that, it might be worth $192,000.

That's why you really don't want to spend too much time actively tracking your net worth. And if you're super interested in how you're doing, for example, then you may be able to find an app that calculates that number for you. But rather than focus on your net worth, other aspects of your financial life probably deserve more of your immediate attention.

What you should pay close attention to

It's okay to track your net worth in a low-key sort of way. But the aspects of your finances that you should be tracking more closely are your:

• Emergency savings
• Long-term savings
• Revolving debt (credit card balances)

You'll want to make sure your emergency fund has enough money to cover a minimum of three months' worth of essential expenses. If you take a withdrawal, keep tabs on how well you're doing in putting that money back.

And your IRA or 401(k) should ideally be growing over time, too. Pay attention to your investments in your account, and aim to increase your savings rate as your earnings pick up.

Now, these aren't accounts you have to check daily. But it's a good idea to make a consistent effort to keep them funded. And part of that might boil down to the choices you make every day, like whether to spend on extras versus bank the money instead.

You should also track what you owe on your credit cards to get your debt paid off as quickly as possible. Again, mindful spending could be essential to knocking out a credit card balance. So could picking up work on the side of your main job if your schedule allows for it.

It's natural to be curious about your net worth. But rather than spend all of your energy focusing on it, pay attention to these super important aspects of your financial life.