How we increased our net worth by 250% in 5 years

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Increasing your net worth is a very important step in becoming financially independent but the question is, how to increase your net worth? The answer is simple actually. To grow net worth, you must be financially responsible with your money. One of the key things to become financially responsible is to have a money management system so you can track your cash flow. You need to know your cash inflow and outflow.

Do you know how much you spend on food on a monthly basis?
Do you know how much you spend on clothing on a monthly basis?
Do you know how much you spend on dining out on a monthly basis?
Do you know how much you save on a monthly basis?

If you can’t answer these questions, I believe you’re in trouble.

Since moving out from home in my early 20’s, I’ve always tracked my spending. But it wasn’t until 2011 that Mrs. T and I started tracking everything meticulously and review our expenses every half year. While there are many different types of budgeting systems out there, they are all about keeping track of your expenses so your cash inflow is greater or equal to your cash outflow. This budgeting system I’m about to go over is something that we learned from Secrets of the Millionaire Mind.

The budgeting system described by T. Harv Eker is very straight forward. You breakdown your after tax income into 6 different accounts and allocate a certain percentage for each account.

  • Necessities (55%)
  • Education (10%)
  • Play (10%)
  • Financial Freedom Account (10%)
  • Long Term Savings for Spending (10%)
  • Give (5%)

Let me go over each account one by one.



This account shouldn’t require a lot of explanation. All the essential expenses like rent, mortgage payment, food, car insurance, life insurance, utilities, clothing, car gas, and etc come out from this account. Basically all the expenses that you need to live, hence for the name necessities.


Money set aside in the Education account is used to further enhancing yourself as a human being. You may decide to take a photography class, get some life coaching, or learn another language. Recently Mrs. T and I signed up for a parental course to aim to become better parents. Life is all about continuous learning, so allocating 10% of your income to improve yourself is a great idea.


The purpose of the Play account is to nurture yourself. Savers like me typically would save, save, save, and save more. We never want to spend any unnecessary money because we feel guilty when we spend money. This may lead us to eventually become like Mr. Scrooge. The play account allows people like me to spend money guilt free. I could go to my favourite restaurant and order some fancy food, I could get a massage, I could go on a weekend getaway, or go out and have a few drinks with my buddies. Money in the play account can be used on my “wants.”

Financial Freedom Account (FFA)

Money set aside for the FFA account is used to create your golden goose for retirement. This account essentially allows you to paying yourself first. This idea of paying yourself first is mentioned in almost every personal finance book that I’ve read. I think the concept is extremely important when it comes to growing your net worth. The money in FFA account is used to create passive income streams and eventually allow you to become financially free. By default the percentage is 10% but I’d argue this amount needs to be much much larger. The key point of FFA account is to never ever withdraw money from this account before you become financially free. Never slaughter your golden goose! Use only the eggs 🙂

Long Term Savings for Spending (LTSS)

The LTSS account is money you set aside for future big item purchases like a house down payment, a vacation, or a car. For example Mrs. T and I used LTSS to save for our month long Danish trip and 2 week Japan vacation in 2015. Having money saved up in the LTSS account allows us to pay off our credit card balance, instead of taking on credit card debt.


You set money aside in the Give account for giving it away. Mrs. T and I believe giving is a very important part of life. We are fortunate to be where we are financially and it’s great to be able to provide a helping hand to the less fortunate. For example, we donate money each month to Vancouver Food Bank and we also regularly donate money to charities like Canadian Red Cross and United Way. We’ve also used money in this account for Christmas and birthday gifts to family.


The starting percentages listed above is a good start but you can always adjust them to fit your needs. The goal is to reduce the 55% allocated for the necessities account and increase the 10% for FFA to a higher number.

Since started this budget system, we have taken it to the next level and changed the percentage allocation for every single account to fit our situation. We have been able to reduce money going into the necessity account and increasing money going into both the LTSS and the FFA accounts.

Does this budgeting system work? You bet it does!

Since implementing this budget system in 2011, we’ve been able to achieve the following results:

I’m surprised and extremely pleased with our amazing progress. It’s absolutely mind blowing how our finances has improved since implementing this simple budgeting system.

Dear readers, do you have a budget system that you use?

Written by Tawcan
Hi I’m Bob from Vancouver Canada, I am working toward joyful life and financial independence through frugal living, dividend investing, passive income generation, life balance, and self-improvement. This blog is my way to chronicle my journey and share my stories and thoughts along the way. Stay in touch on Facebook and Twitter. Or sign up via Newsletter