For some, this post will be a glorious act of confirmation. For others, a bubble-bursting, eye-opening, wake-up call.
Maybe you only have $500 bucks in your savings account and you feel broke. Or maybe you have $30,000 and you think you have nothing to worry about. Either way, as much as we draw anxiety or comfort from the number on our monthly bank statement, there is another number that will tell us the truth; and nobody will tell you that number. You’ll need to figure it out on your own. It’s called net worth.
You have probably heard that number before, but have you ever calculated it? Take all of your assets (the value of what you own like your car, house, etc, plus all bank and retirement accounts and cash) and subtract your liabilities (your debt; all your loans and anything you owe money on). The goal is to have a positive number, and to watch that number grow in time.
Net worth is the true measure of financial well being. A doctor might have a huge house, two nice cars, and 50k in the bank. But he might owe 250k for his student loans, not own the cars, and have barely made a dent in the mortgage. Technically, the bum on the street is more well off than he is. Material possessions only give the appearance of wealth.
The sooner you find out your net worth, the sooner you can realistically work towards financial freedom. And THAT is the goal.