People who have watched my YouTube channel for a while probably know I have two simple tools: a Family Cashflow Tracker and a Family Wealth Tracker.
But here’s the funny thing.
The Wealth Tracker sells about three times more than the Cashflow Tracker.
And I get it.
Net worth feels exciting. It is the big scoreboard number. It tells you what you own, what you owe, and whether the line is moving in the right direction.
But the more I look at money, both in my own life and through the conversations I have with people in this community, the more I realise something:
Net worth is useful. But it does not tell you how financially relaxed you are.
You can have a high net worth and still feel squeezed.
You can own a home and still feel cash poor.
You can have investments and still panic when school fees, insurance, tax hit at the same time.
That is why, as we get closer to EOFY, I'm going to share the numbers I usually have a quick look at:
1.Savings Rate (What you save/invest ÷ Takehome Income)
This is the driving engine to build financial breathing room, future passive income. A high income with no savings is just expensive exhaustion wearing nice shoes.
2. Investment Cashflow (Passive income after tax ÷ Annual expenses)
Income such as dividends, rent, interest, mutual fund distributions may not be tax efficient, but hey at least you don't have to decide what investment to sell to realise some capital gains (especially in Australia the 50% discount long-term CG is being discussed).
- If your passive income cover 30%, that's more breathing room.
- If they cover 100%, that is financial independence territory.
3.Debt pressure (Debt payment ÷ Takecome income)
This metric helps you understand how much of your income goes towards repaying debt. Debt is not automatically bad. But debt that removes choice is expensive in a way the interest rate does not fully show. A large home. Multiple investment properties. Big repayments. Low liquidity. On paper, you may look wealthy. In real life, you may not be able to take a break, change career, start a business, or help your family without stress.
4. Your liquidity runway
How much liquid assets do you have to allow you to deal with unexpected life events without stress? A good starting point is your emergency fund, then sinking funds. How long could you keep life moving if income stopped? 6 months? One year?
Which number would improve your life the most if you focused on it for the next 12 months?
For some people, it will be investing more.
For others, it will be paying down bad debt.
For some, it will be building a proper emergency fund.
For many families, it will simply be understanding where the money is actually going.
Neither is pretending to be wealthy while feeling financially squeezed.
I would rather have quiet freedom than loud wealth.
And if you want help seeing your real numbers clearly, check my Family Cashflow Tracker
It is the tool I built to help families map income, expenses, sinking funds, savings goals, and investing capacity in one place. Not to look rich. But to feel in control.
Talk soon,
Irene
