Over the last week many of you shared your core values and some of you also listed specific goals associated with them. They were inspiring to read. You also shared feedback, saying the prompt helped you dig deeper and think more carefully about what you want and value. Thank you for your thoughts, responses, and feedback – and most of all, thank yourself for taking the time to think it through.

Here are some core values that came up often (though we each should and do have different lists):

  • Pay off your student loans (and more quickly than the expected loan pay-off dates).
  • Have the resources and flexibility to travel and pursue worthwhile hobbies.
  • Spend more time with the people you care about.
  • Know you can afford certain “luxuries” in life without having to worry about the price tag. (Note: These “luxuries” vary from person to person, so it’s about knowing which are valuable to you and your life, regardless of what you see the people around you have. Remember: your life, your goals. Not everyone needs a CrossFit membership.)
  • Help others and give back.
  • Retire (in the sense that you can pursue your passions and not someone else’s).

We’ll continue to use this core to help us save and spend wisely (so stay tuned for future posts), but first I think it makes sense to know where you stand currently, so this week we tackle some numbers. I know, numbers, but stay with me and don’t let the numbers discourage you. I’m going to break it all down for you.

What are you worth?

I’m not talking about how much you’re worth in the eyes of your friends or your employer, I’m talking net worth. The reason for calculating your net worth is to know where you stand, NOT to judge or feel bad. It’s not about getting discouraged or inflating egos. It’s just about knowing…because if you don’t know where you are now, you can’t track your progress and where you need to go.

So this week, I want you to calculate your net worth and fortunately it’s fairly simple to do.

NET WORTH = ASSETS – LIABILITIES

So, what are your assets?

These are things you own, which you expect to have future monetary value or worth to you, including:

  • Savings accounts.
  • 401(k), 403(b), and other employer sponsored retirement plans.
  • Don’t forget lingering retirement accounts from prior jobs.
  • Individual Retirement Arrangements (IRAs), traditional or Roth.
  • Investment accounts.
  • A house.
  • Other properties you own (land, a rental property, a second home, etc.).

Note: For employer sponsored retirement accounts, use the current vested balance. (Vested means you’ve earned it. You may not have worked long enough (yet) to be entitled to all of your employer’s match. Look for the vested balance on your statement. You are always 100% vested in your own contributions.) For personal accounts, the current balance is what you should include. For properties, use the fair market value – the estimated selling price if you sold today.

Your assets do NOT include things you own but will likely not have (significant) future value to you, including:

  • Cars or other personal vehicles (unless you have a car collection). This is because cars depreciate quickly (and you’ll likely drive it for a long time until you really need a new one and it is of far less value or you will trade it in and put that value toward a newer car).
  • Checking accounts, assuming this is the account where you pay your bills and daily expenses. If this account regularly sees money flowing in and out and isn’t for future big purchases but instead for day-to-day and month-to-month purchases, don’t include it. [Note: If you are keeping a decent amount of money in a checking account, feel free to include it. I like to keep my checking account balance – an account that earns very little interest – low and consider this money already accounted for by upcoming monthly expenses so I tend not to include it. Do what makes sense for your situation.]
  • Computers, clothes, and other things you use regularly.

Pull out the document you’re using to keep track of all this stuff (your core values included) and list your assets and their current values and then add them all up to get your total asset value.

What are your liabilities?

  • Credit card debt. (This does not include your monthly balance if you charge regular expenses to a credit card and pay it off each month.)
  • Student loans.
  • A mortgage. (Note that this is your outstanding balance. You’ve already captured the equity you have in your home on the assets side.)
  • Any money you owe to anyone. (Seriously, if you owe your friend for dinner, pay them back.)
  • Car loan.
  • Any other loan or outstanding financial obligation (again, we’re not talking regular bills you pay each month).

List your liabilities and their current value and then add them all up to get your total liabilities.

For some, the math may seem simple enough, while the bigger challenge might be to track down and organize everything so you have accurate numbers (and haven’t left anything off), but I encourage you to take the time to do it. It’s only going to get more difficult to remember and track down as time passes.

Once you’ve done this, take your total assets and subtract your liabilities to calculate your NET WORTH. Again, no judgement, but you have to know where you stand today to track your progress going forward and to know what you need to focus on.

In future posts, we’ll continue to break this down and help you know what to do with it going forward.

And as always, if I can clarify any of this or be of additional help, if you have any questions about calculating your net worth or want to discuss, send me an email at letlucfinance@gmail.com.


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