Almost two years ago, I wrote about the different types of financial wealth calculations and which one a person should focus on depending how far along he or she is on their financial journey. My thesis is that one should focus on the lowest numbered calculation and determine an appropriate goal before moving on to the next calculation. The progression I proposed was:

1. Net Liquid Assets (NLA): Total liquid money (deposit accounts, cash) – total immediate debt (credit cards, home equity, student loans and other debt [but not car])
2. Net Investable Assets (NIA): NLA + retirement accounts + other non-liquid investments – investment-related debt (margin accounts, real-estate loans for investment properities, etc.)
3. Net Worth (NW): NIA + (house value + car value) - (mortgage + car loan)

Now that I have finished paying off most of my short-term debt, I am finally able to officially say that I am now able to shift my focus from Net Liquid Assets to Net Investable Assets.

Shifting financial focus through incremental growth

I have stated before that I believe in incremental change, and that's true. But incremental doesn't mean unplanned or without direction. Incremental change requires developing and revising short-, medium- and long-term goals. The goals should reflect intentional progression – such as saving $50 in the next month, $200 in the next quarter, and $1,000 in the next year – so that you can clearly see the increments by which you desire to grow.

Furthermore, incremental growth doesn't mean simply setting larger monetary goals. If you really want to grow your assets, you need to continue following the strategies that helped you get to where you are, while also learning new strategies that will help you reach your new destination. The good news is that having money can make it easier to earn more money; the bad news is that it's not a guarantee.

I am excited to start learning new strategies, for example writing covered calls, which I did for the first time yesterday. But I am taking it safe and slow, not investing more than I am willing to lose and doing a lot of research in the process. I look forward to sharing what I learn, and hearing about things you might find out as well.

My new financial goals

Given my shift, I have updated my financial meters on the right sidebar to indicate my new goals. My primary concerns are to:

• Build up an emergency reserve of $12,000
• Increase my retirement savings (which consists of a 401k, a small pension that I am fully vested in, and a Roth IRA) to $100,000

I don't actually have a timeframe in mind yet for either of these goals. I would like to build my emergency fund sooner rather than later, perhaps by the end of the year, but I am not sure that is entirely realistic. (I'm dedicating about $400 per month toward it now.) Hopefully I will be able to take advantage of some free-money deals or find some additional side income to help me get there faster.

I also would like to start education accounts for my two daughters. I have a little bit of seed money set aside, but have not yet opened the accounts. I have to ponder at bit about what goal I want to set for that.