Accept These 3 Truths About Your Net Worth to Better Steward Your Resources

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You have a number that’s yours alone.

Unlike your social security number (or non-U.S. equivalent), this number, also unique to you, is emotionally loaded. You may avoid, resent, be pissed at, obsess over, tolerate, be resigned to, or be ashamed of it, but will rarely celebrate it.

It’s your net worth.

Of course, your value as a human being has nothing to do with your wealth. But living in a capitalistic society, having to trade labor, time, or expertise for food and shelter, and marinating in a consumerist stew glamorizing wealth, it’s natural to make meaning out of your net worth.

And that meaning is rarely a positive one.

It’s normal to worry about having enough or being dependent on a partner, or earning up to one’s potential (whatever that is) when the future is 100% unknown (well, except for the death part). 

Getting comfortable with your number requires acceptance.

Accept the future is unknown, that good decisions today may results in bad outcomes tomorrow, and that you cannot control anything other than your mind.

Accept you’ve done the best you could up to now and that there’s no shame in that.

Accept you’re gonna have to do something about it if you don’t like how you feel about your number. 

Note I’m not saying you have to do anything about your number, only how you feel about it. Your number may be fine, or it may not, I don’t know. But I’m willing to bet dollars to donuts that you’re not feeling 100% A-OK about it, no matter how many commas it has in it.

If you’re ready to feel better about your number, here’s what I suggest:

First, actually calculate it. Take a deep breath. Find out what you’ve been avoiding all along. Tally up all your assets, broken into 3 buckets: Liquid, Illiquid, and Tax-deferred. Add up all that you owe and subtract from your assets. 

That’s your net worth. 

Second, don’t freak out if it’s negative, and don’t swagger if it’s positive. 

IT’S JUST DATA. 

It contains information, but it’s devoid of meaning.

You could have a big number, but if your assets are consuming rather than generating income for you, they’re problem assets. Your number looks great, but you could be heading for a liquidity crisis.

By contrast, you could have a big negative number because you borrowed money (e.g., medical school tuition) in order to create future earnings that will pay down that debt. In any case, a negative net worth is not a character flaw, nor does wealth imply moral rectitude. 

The information your number yields may not be what you want, but once you know what it’s saying (e.g., you can’t retire now without changing your lifestyle drastically), you can take informed action. It’s better to know the info and be bummed than not know and make decisions that will make your future problems worse. 

Third, your number fluctuates all the time, from changes in your net income and changes in the value of the assets and liabilities themselves. The market value of assets goes up and down all the time, and liabilities increase as interest compounds on unpaid balances. Similarly, your net income (or loss) varies, adding to or taking away from your wealth.

Your net worth is always ebbing and flowing.

The good news? Whatever is dynamic can be steered to grow in the amount you desire. Your future net worth is created by the decisions you make now, plus a large dollop of all the uncontrollable things that exist in life, including luck and privilege.

Although your number says nothing about your worth as a human being, you have a say in how it’s created, how you steward your resources, and whether you create the conditions that allow it to flourish.

You can find help on cultivating acceptance here and here.

And If you want help calculating your net worth, evaluating its composition, coming up with a growth plan, or just processing your feelings about the number, hit me up.