Your Net worth is more important than eating!

May 5, 2010 · 29 comments

I went around the other day asking some of my friends if they knew what ‘net worth’ meant. I realized something after hearing their definitions… I need to get new friends. They didn’t have the slightest clue. Seriously people, no clue? Your net worth is really important.

If you are serious about getting your financial life in order, you already know what your net worth is and how to calculate it. If you’re a financial infant, than you probably don’t so let me explain via this super technical formula….

If you don’t know what your net worth is right now, I’d encourage you to take a minute to figure it out (you can even use this calculator to help). After you’ve got it calculated, you can then compare your worth to the rest of America….

Wanna know something? Your net worth TODAY isn’t really that big of a deal. You can’t change the past, but you sure can change your future. The most important thing about your net worth is tracking it. If you don’t update your net worth at least once a year (I do mine every month), you’re a big fat stupid head. Yeah, that’s right… a stupid head!

Sometimes you can’t really control the fluctuation in your net worth (like if you own a home and it temporarily depreciates or if the stock market is having a bad month), but there are two general rules.

1) If you’re net worth goes up each month, that is AWESOME.

2) If your net worth is spiraling downward, you may have some BIG problems.

So remember, when it comes to your net worth, it’s not your current number that matters. It’s where your worth is going (hopefully up) that’s important.

Questions for my beautiful readers…

What is your net worth? (Mine is $41K)

How long have you been tracking it? (2 years)

Is it generally moving up?

If you haven’t calculated it before why not?

{ 29 comments }

1 Jared

Net worth: roughly $120,000 (only counting liquid and semi-liquid assets)

Tracking: since I was married in July of 2006

Trajectory: upwards!

2 Jeff @ sustainablelifeblog

My net worth is hovering around -20,000. I’ve been tracking it for about 12 months, and it’s been “trending” in a positive direction.

Im glad to see you got back to your normal (to me) schedule of posting early in the morning so i can get my PDITF fix before I brush my teeth.

3 Beth M

Just found your site the other day and I LOVE your snarky attitude toward debt. My net worth really sucks right now because I’m finishing up school (for the second time) but luckily, I had a parent that taught me about debt and net worth since I was a wee little thing! I’m a little afraid to look at it right now but I know that as soon as I have a real salary, I’ll have a blast watching those numbers change.

BUT eating is important too. And you don’t have to eat just ramen noodles and beans to stick to a budget. Check out my site about cooking on a budget http://budgetbytes.blogspot.com

Love your site, keep it up!
Beth

4 Rebecca

Since I started tracking my net worth in Sept last year, I’ve improved it from -$24K to -$6K (slowly working to free myself from Sallie Mae’s chains). I like the comparison chart, but I’d be interested to know what percentage of Americans actually have a negative net worth. I bet it’s bigger than the $1M+ category…

5 Abigail

I’m not bothering until we’re out of debt. ($1500 left, baby!)

Given our situation — chronic health problems interfering with employment, big medical bills — I don’t feel too bad about leaving this hanging. Until last month, we had never broken $40,000 in combined income, part of which was disability checks. Oh, and for over a year, we had to pay $500 a month just to keep my husband insured, while racking up around $200 a month in doctor visits etc. All that and we managed (almost) pay off well over $40,000 in debt in the last four years.

I guess, in short, we had a few other things on our mind.

But once we are clear of debt, I promise I’ll start caring about our net worth.

6 Kaye

Our networth right now is just over $85,000. Which sounds awesome, but we are really tied down to debt at the moment. We have lots of money in retirement accounts, which is why our net worth is so positive.

The good news is its trend–it has increased $23,000 since I started tracking it in October 2009 due to selling some stuff, paying off 3 debts, and some great stock market activity for the 401k.

7 Zazzi

I do a Personal Balance Sheet every six months, since our net worth doesn’t change very quickly.

Current Net Worth based on January 1, 2010 is $165,161.00. Sadly, it is taking a downward turn from the previous year because of new student loans. (Wakes me up in the middle of the night, worring about those suckers.)

Main equity is house, main debt is house and student loans.

I’ve been tracking my net worth for about 2 years, ever since taking a fabulous personal finance class.

8 D

“You’re Net worth is more important than eating!” = “***Your*** Net Worth is more important than eating!” Your is a possessive. You’re is a contraction of “you are.”

One of these days, ninja, you’re just going to make my head explode. (Well, explode for a reason besides awesomeness. It already does that.) Sorry for the grammar Nazi moment — the you’re/your thing is a pet peeve of mine.

9 D

And…my net worth? I am a lowly unemployed college student. (The unemployed will, I believe, change soon. The college student has another year or so) So…just above zero? I have a few hundred cash, and my parents have a few thousand saved for college, but unless other than that, I’d have to figure out how much my possessions are worth, and I can’t imagine that there’s much there. I’ll be generous, and say $1000 all together.

This will unfortunately go negative fairly soon. I’m going to have to take on student loans to finish my education, although I hope to mitigate it as much as possible by earning money myself, and relying on the Bank of Mom and Dad. (My goal is to keep total undergrad debt under 10k, which should be doable. My only regret is not figuring this out when I was in high school, so I could start saving money then!)

10 PunchDebt

I suck at grammar. Not at necessarily knowing the rules. As I am familiar with the you’re vs your game and the their, there, they’re game as well. I blame it on laziness. But then again, in my about me section I made it pretty clear that I would most likely be making grammar and spelling errors.

Keep on correcting me though and eventually I’ll get more focused :)

Thanks!

11 Larry

“I need to get knew friends.”

Uh, that should be “new.” ;)

12 PunchDebt

man must have been a late night for me…. haha.

13 Girl Makes Cents

I know roughly where I stand. I have not calculated it yet though, mainly because I am still in debt. It would have been interesting to see from the day I graduated until now though. I think I will start tracking it either in the fall or as a new years resolution in 2011 (don’t hate!) which is when I plan to be debt-free. I already know that I am up about $30,000 from June 2008 though! Yay!

14 DTrubble

1. -$14,000.
2. About two years.
3. Trending up… should be around +$4000 in a little over a year.
4. I have an absurd Excel sheet calc’ing my current net worth and forecasting forward each of the next 14 months based on conservative assumptions on budget, investments, and interest/fee accrual. This way, I can evaluate any one-time payment or investment decision based on it’s long-term impact on my net worth, and ask myself: “do I really need this $85 bottled smoothie?”

15 Jenn @ Paying Myself

1. Approx. -$41,393.
2. Never have before!
3. When I started my blog in September 2009, it was closer to -$50,048, so I’d say it’s definitely going up! It helps that I got a job in that time. I have put away just over $2,000 in savings, plus my savings accounts for the money I owe the government, plus paid off $3,000 in credit card debt. However I also got a second credit card for business expenses that is carrying quite a balance right now. :-S
4. I only calculated my net worth for the first time just now. I didn’t before because it was a big scary number. It still is, but I feel like I have more control over it now so it’s not so scary.

Also – LOVE the comic!!

16 Jessie

1. What is your net worth?
It’s $8,897
2. How long have you been tracking it?
Since January, 2009 when I started my PF blog
3. Is it generally moving up?
Yes, consistently. When I started tracking it was negative $(7,499). It’s pretty cool that in about 14 months my networth flipped :D

17 Allison

My networth is (-$5904) when I include my house… without my house its like (-$18858) I have a lot of student debt right now.

18 Allison

I forgot to add that I’ve been tracking since Jan 2010 and my networth has gone up $13,536 since then.

19 Jackie

Mine’s just under $240K right now. I’ve been tracking it monthly for nearly 4 years. I like to look back on previous months to see what had the biggest impact that was also within my control.

20 Leif

1) -$32,000
2) Since I started reading this blog, about 5 months.
3) One the long-term scale, it’s been decreasing drastically over the years due to student loans. But in the past three months, it’s only been going up!
4) I previously didn’t see value in this as an indicator of progress.

21 eemusings

Never officially done it.

Didn’t have debt, and had all my money in one bank (diff accounts) so really just had to glance at my internet banking screen for a quick overview. Plus I was a student, so wasn’t really managing to save anything.

I plan to start tracking once I change Kiwisaver provider, because it will be much more interesting to keep an eye on now that I have my first investments!

22 Kate

Net Worth was originally -18,000, and is now 38,000 (a year later).

To be honest, I only “checked” it last week (for the first time!). Checking it might be a touch optimistic though… I only noticed it because I accidentally clicked on a new page on my online banking layout and was SHOCKED by the number.

Paying yourself first works, folks.

23 Larry

I agree that tracking your net worth is important, but unless the amount is correlated to your age, income level, types of assets owned, your tax situation, ratio of debt to assets, and even where you live, it’s not a very meaningful figure.

Many people include the equity in their homes as part of their net worth. But obviously this is not a liquid asset and its value can easily fluctuate. It would be more to indicate the percentage of your assets that is a home vs. how much you have in cash and investments. And while the value of the home (e.g. – $250,000) is offset by your mortgage (e.g. – $200,000), if the mortgage is a high percentage of your assets, or if exceeds the value of the home, then your net worth may be fairly low or even negative.

If I were to give my own net worth, it would be higher than any I’ve seen quoted here (both cash/securities and cash/securities + home). But because I’m older than a lot of people here and I live in an expensive area with high state taxes, instead of saying, “Wow! that’s a lot,” you might justifiably say, “That’s not so much.” On the other hand at least, my total debt is very low as a percentage of my assets.

24 Larry

It would be more to indicate

s/b: It would be more meaningful

25 Ronnie

-$178,000
For a year.
Moves up around $1,000-$1,500/month. Was at -$186,000 at the beginning of the year.
My goal was to get to -$170,000 by the end of the year, but it looks like I might be able to beat that number. We’ll see.

26 Budgeting in the Fun Stuff

Net worth: $137,200 including our home and cars or $73,800 not including them.

Tracking: since October 2009 on Net Worth IQ and post it every month on my blog.

Trajectory: It’s gone up about $3000 or more every month.

27 Stephan

1. around 25k
2. just recently started to track it
3. has basically remained unchanged, which obvisouly means i am spending too much money and not saving enough

Preferred Financial Services

28 simple in france

Wow–I had no idea we were above average in our net worth. We’re cheapos and don’t earn too much money in any given year. But I guess we’re doing well enough.

We don’t really track our net worth though. From time to time we check on what it is, then we forget about it again. . .etc.

Our net worth had gone up for a while, then it stagnated because I’m not currently working. So we’ll just see. . .

29 chris

What is your net worth? (Mine is $41K)–I dont know. I think about, but I dont do anything to figure it out, I read money blogs so i’ll do more about that,,, one of these days.

How long have you been tracking it? (2 years)tracking, not knowing? forever…

Is it generally moving up?

If you haven’t calculated it before why not? lazy I guess. Or i dont want to know…

Previous post:

Next post: