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

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:

  • Increased our net worth by over 250% in 5 years
  • Increased our dividend income from $650 per year to over $10,000 in 2015. We hope to generate $13,000 in dividend income in 2016.
  • Turned our love for food into two cookbooks
  • Purchased a house.
  • Went on several great vacations (California, Taiwan, Italy, Denmark, Japan)

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?

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46 thoughts on “How we increased our net worth by 250% in 5 years”

  1. Hey Bob,

    I am looking to employ some of your ideas to slightly adjust our approach to budgeting. We’ve been tracking our spending and net worth for over a decade and do most of these things overall but the areas where we don’t really focus is Play & Education. We don’t ‘scrooge’ ourselves by any means but I feel we could have a bit more fun instead of socking everything away into the the FFA account (we’re really good at that!).

    So the question I have for you is if you base your calculations/percentages solely off of your monthly income from your jobs or do you setup a budget at the start of each year taking into potential account lump sum payments (e.g. tax refunds, gifts, year-end bonus etc.. ) and dividing by that estimated amount instead? If you only do the calculations based on monthly income from your jobs, how do you allocate lump sum payments when they arrive? Your necessities should alread be covered (if budgeted correctly) so do you just top up the other 4 buckets?


  2. Bob, was wondering when you set up those accounts, what bank are you doing it with, are you setting up savings accounts that you can withdraw from. For example for the necessities are you setting up all your bill payments to come from there?

    • We are banking with Coast Capital, which is a credit union here in BC. The necessities is set up as a chequing account, all other accounts are savings accounts.

  3. My plan is focusing on non-school debt for the next few months. Then build up a down payment. Once I purchase a small condo, my expenses will go way down with no more wasteful roommates and a mortgage lower than my rent. My plan then will be 35% to necessities, 35% student loans, 15% investment, and 15% long term saving. The skill I’m building now will double my income. When I double my income, I will pay off the remainder of the smaller student loan, and then destroy the larger student loan. In three years, I should be debt-free. My plan will change again. 20% necessities, 50% investment and 30% long term savings.

  4. 2.5X in 5 years is huge! I wish I could do the same. Alas, I’m on the 4-5% a year grow plan…. so that will take me like 15 years to just 1X it!

    I really fear winter is coming for the next 2 years. Fingers crossed!


  5. Great job Tawcan. Percentage increases like 250% (meaning $1 became $3.50 in 5 years) depend a lot on the starting baseline. I agree with Retire by 40 on this front. Your net worth increase works a massive 28% CAGR. Over the same 5 year period, I have achieved only a 12% CAGR but I started with a $1 mill net worth 5 years ago. Another way to put this in perspective is to calculate the ratio of net worth to your annual earned income at start and end points. If you are starting at NW to Income ratio of say, 2, it’s easier to achieve this kind of percentage growth with disciplined savings than if you are starting with the ratio being at, say 7, even though your savings percentage might be same.

    • Hi PMV,

      Agree that it definitely depends on your baseline. I think our CAGR will probably start to slow down as our net worth becomes more and more significant. Same concept applies to our dividend income as well. A $200k increase when your base net worth is $100 is quite significant, not so much when your base net worth is $2M.

      The ratio of net worth is a great idea. I need to calculate ours.

  6. I have no idea how much I spend on food or clothing each month.

    What I do know is I save on average 64% of net income every year for the last 7 years, so I doubt I am in trouble.
    That’s ingrained prudence.

  7. Wow Tawcan, some incredible numbers there – fantastic and well done to you (and Mrs Tawcan) for sticking to your budget system. That must have taken a lot of focus and determination but you have shown what can be achieved!

    The only budget I have is for my groceries, I don’t feel the need to monitor anything else and this seems to work for me.

    • Hi weenie,

      Thanks. I think your budget system works just fine too. Groceries is probably one of the biggest expenses for everyone, so keeping an eye on that expense is a great idea.

  8. This is awesome, Tawcan. Very impressive. I’ve never felt the need to use a strict budget for future spending, but it’s tremendously helpful to look back at prior years and months and to figure out if it’s aligned with your goals and values. I like the categories you laid out.

    • Hi Matt,

      Thanks. Strict budget isn’t for everyone and I think every budget system needs to allow some flexibility. Ours certainly allows that.

  9. Hi Tawcan,

    this numbers are really impressive, while reading this I am even more motivated to reach such numbers as well :).
    Yes I do also keep record of my monthly expensive and income as well and it helped me to save more money.

    Keep up the good work!!



  10. Not only 100% and 200% increase. It’s 250%! This is so impressive Tawcan. Thank you for sharing how you achieve this number in 5 years. It feels so encouraging really to do it too.

  11. I started off with $100K in college debt in 2006 after I graduated from grad school. July of 2015, I declare financial independence. This is my strategy:

    1. “pay ourselves first” – so I put away the max for our 410K – $18K/year, employer matched $8K, $5,500 to Roth IRA,
    2. essential bills – mortgage, insurance, food, taxes, student loan payment, entertainment. Believe or not, mortgages added $10K to my net worth (pay by tenants).
    3. savings – $30K prior to having the 4-plex, $50K after having the 4-plex
    4. 401K appreciates ~$20k
    5. $3.5K in dividend income, and $2K in capital gain from selling stocks
    6. “it’s better to be in the market” – basically, it’s ~$100K gain each year. The growth is outpacing my take home income. But it’s all begin with putting our saving into the market.
    7. delay the “instant gratification” shopping, no impulse shopping, shop wisely
    8. grow my own food, cook my own food, pack lunch
    9. I don’t like to track everything, because frugal is in my blood 😛 LOL 🙂 I can’t just sit there and tally everything up. It’s a mess already trying to tally the dividend income every month. hahah! LOL 🙂

  12. Interesting setup to start with, guess you are right that you do have tailor it to your personal situation. Ours would look completely different 😉

    Impressive growth though! Just checked our finances to see what we did, but we did not manage 250%, we got to 245% 😉

    • Hi Team CF,

      Thanks, you’re right, just need to tailor the system to fit your situation. 245% increase is pretty impressive!

  13. The budgeting system that you show here is interesting. I think it is a good basis to start from.

    Some of the accounts are the same i our system. The spend (fun money) and travel account are my favourite aaccounts

    Congratz with the high increase! Great progress

    • Hi ambertreeleaves,

      I think it’s a great basis to start from as well, we’ve changed the %’s quite a bit to suite our situation.

  14. No budget system and no real tracking of expenses (or income) either. My wife and I have a much simpler system. Set up automatic payment for all recurring bills – ie credit cards, mortgage, taxes, utilities. Done. Set up automatic withdrawal of investment for RRSP and TFSA accounts. Done. Spend or invest the remainder as we wish. Usually, we look at increasing my wife’s RRSP investment if she has room and it makes sense from a tax perspective. We make sure to keep a few thousand handy for emergencies (ie new washer/dryer or whatever). Otherwise we feel free to spend what is left as we want – a trip, dining out, whatever…. We have never tracked the income or expenses to any degree, and only do our net worth once per year, but it has always gone up. Works for us.

    • Hi Chris,

      If it works for you, don’t change it. The goal for any financial system is to find one that works for you and stick with it. Yours sounds very simple. Great stuff.

  15. Great job on the increase in your networth obviously, but I also think it’s great that you budget your donations to charity. We give between 8-10% annually, split between our church and secular charities. We think it’s so important, and it helps remind us how blessed we are.

    I hope you guys have a great week, and you get more sleep this week:)

  16. Great job on your net worth. That’s an amazing accomplishment in such a short time. I would love to double our net worth in 5 years, but I don’t think that’s realistic at this point.
    I don’t really agree with the break down. Everyone has to prioritize their budget for themselves.
    Our saving % is higher. Travel is where most of our play money goes.

    • Hi Joe,

      Considering you high net worth, it’s probably harder to have very significant net worth increase. Being realistic is a good idea. 🙂

  17. I like how simple the system is, we do not have a budget currently. For the last few years we have been slowly increasing our savings %, whatever is left after that and our fixed bills is to “live” on. I do like the idea of setting aside separate accounts for travel.

    Congrats on your huge net worth increase and dividend Payments!

  18. Having a plan and being intentional is such a key to growing your net worth. I agree with having a percentage allocated for “play” you need to included a little fun in the budget or managing money, work towards goals can become a chore.

    • Very good point Brian. You can just save save and save, you’ll feel exhausted and eventually want to just blow a bunch money. The play account allows you to spend a little bit of money to enjoy yourself.

  19. Hey Tawcan, that is amazing what you have achieved in 5 years and really goes to show how much of a difference people can make if they try.

    At the moment we have allocated all our expenses (plus a bit of fun/luxury). Everything left after that goes into savings. Whether we boost our cash or invest (or use for IVF) is up to us at that point. So we don’t have set %s, just guideline actual $ amounts.

    It’s definitely working for you though, keep going 🙂


    • Hi Tristan,

      We were amazed as well. I think your budgeting system works as well but I do think paying yourself first is a great idea.

  20. Keep it up Tawcan. You and your wife are doing awesome bud. I’m sure one day you will be able to full fill your dream in writing that 1 Million Dollar Check. I know it’ll happen and I’ll be there to shake your hand.
    Keep hustling hard and enjoy that family bud. Cheers.

  21. So exciting to know your net worth increase percentage! And I love the idea of the “save to spend” account. That gives you a little more mental freedom to actually spend that money instead of feeling like every dollar out the door is slowing down your progress to FI. And have you read the Millionaire Next Door? In it, he talks about what you should expect to have saved, based on your age and income. That was super eye-opening for us. Because, sure, we can actually save pretty quickly based on our incomes alone, but understanding that we were underperforming in wealth accumulation was the reality check that we needed. That gave us the motivation to up our game, and now we’re ahead of where we “should” be, which feels great!

    • Hi our next life,

      Glad that you enjoyed the little detail that I’ve shared. Yes have read Millionaire Next Door a few years ago, our net worth is higher than the formula I think. When we read the book we were nowhere close though.

    • Hi Investment Hunting,

      It took me a while to be OK with the Play account but once I’m OK with it, it feels good to spend that money to treat ourselves.

  22. I Haven’t seen this specific breakdown, but I like it. I always like a budget that includes giving. And investing in yourself is a great line item on the budget! That’s a great idea!


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