Part 2: tracking our savings rate and net worth

Vimal Fernandez
Sep 15
3 min read

Updated: Sep 25

There’s a lot out there to look at, so focusing on a few things grounded us. Photo: Lake Como, Italy.

Disclosure: I’m not a financial advisor. This isn’t financial advice — just what worked for our family. Your financial journey is yours to chart.

IYKYK: nothing brings a couple closer than debating if a used IKEA dresser counts as an asset. 🛠️📦😂

Now that we had our big ol’ ‘why’ nailed down, it was time to roll up our sleeves and do some maths.

We needed to track our income, spending, and net worth to establish a baseline. We could only improve what we measured.

First, a few facts:

My wife is an attorney. I’m an engineer with an MBA.
We both had good jobs that provided solid health insurance, disability coverage, and basic life insurance.b
We started our Financial Independence (FI) journey about 7 years into our careers, and right after our first child.
We both grew up with the “living below your means” mindset, which gave us a bit of a head start.
We always had an emergency fund of about 6 months worth of expenses, which seemed intuitive to us.
My wife came out of law school with $200k in student loans at 8% interest (yikes!). She lived frugally, worked hard, and paid it off in 5 years.

By the time we got serious about FI, we had no high-interest debt, a manageable mortgage, solid jobs with benefits, an emergency fund, and a decent savings habit. But we were still flying blind—without a clear picture of our finances or what it really took to be financially free.

Calculating our financial baseline:

Tracking our income and spending:
1. First, we listed all our income streams: salaries, bonuses, stock/options, ESPP, 401k match, dividends, side hustles, etc.
2. Then we linked all our accounts (credit cards, checking accounts) to Quicken Simplifi ($5/mo) for real-time expense tracking and categorization. It really helps that we almost always pay with our credit card. The automation is amazing, and it gave us full clarity on where every penny was going.

Adding up our taxes:
1. We dug through our tax returns, pay stubs, and W-2s to add up what we actually paid in a given year—we made sure to include income tax, Social Security, and Medicare.
2. This stuff is confusing and sometimes hard to find. Below are a few resources that helped me understand our taxes a bit better:
  1. Book: Taxes Made Simple
  2. Blog: Go Curry Cracker
3. When the paperwork was hard to find, we used online calculators (like this one) to estimate our taxes.

Calculating savings rate:
1. Savings Rate = (Income - Expenses - Taxes) / (Income)
2. From the steps above, we have everything we need to calculate our annual savings rate.
3. Below is an example spreadsheet showing line items for Income (from paystubs & brokerages), Expenses (from Quicken), and Taxes (from W-2s & tax returns). This view gave us a clear snapshot of our annual finances.

Calculating our net worth:
1. Net Worth = Assets - Liabilities
2. We added up all our assets: checking and savings accounts, stocks, retirement accounts, HSA, 529s, real estate, cars, even furniture (yep, even the stuff in our house counted).
3. A quick side quest: while doing this exercise we noticed our emergency fund was a bit low. So, we topped it up with ~6 months of expenses in a high-yield savings account (we use Capital One–no fees/no minimums!)
4. Then we added up liabilities: mortgage, student loans, credit cards, car loans, medical debt.
5. Lastly, we subtracted those two numbers. And boom! Just like that, we now had a Net Worth baseline to build off of.
6. Below is an example spreadsheet showing our Net Worth calculation. It was really fascinating to track how our Net Worth changed over time.

Tracking our savings rate and net worth gave us our path forward

This step was foundational. We saw how the income we earned was taxed, and how whatever remained—after covering our spending—directly contributed to growing our net worth. Then we started watching our net worth increase, not just from saving, but also through the power of asset appreciation and compounding.

If we were serious about making work optional, this is where we had to start. With a clear understanding of the fundamentals and a financial baseline, we could now begin optimizing our numbers and building our path to FI. 🚀🚀🚀

Next up: Part 3: calculating our FI number and setting goals

This post is part of our 'journey to early retirement' series, sharing our path to Financial Independence (FI) and early retirement with kids.