When you review a company’s audited statement a sophisticated reader isnt only looking at the balance sheet (assets – liabilities = net worth). There is the auditor’s opinion, income statement, statement of retained earnings, cash flow and notes. Sometimes there is even a management’s letter to the users of the financials.

However my total net *value* (for example) is much more than that. It includes the goodwill I have with others that can directly be turned into money and services if required; and it includes the social liabilities I have which could be directly turned into expenses if others need that from me.

“net value” isn’t a financial term; had you picked something more like that, the post would have been just as good for those who approve of the ideas of counting your fuzzies; and less irritating to the pedants.

Just a suggestion for those of us who are a bit less organized, and would like to delve deeper into our finances without all the manual input of making our own spreadsheets.

Oh, and let’s make it clear for the last post’s haters… I’m not a guru. I’m just another person doing the best I can, learning life’s lessons learned like everyone else :)

I agree wholeheartedly with your post. Thank you for all your thoughts and tips each day.

Margaret Mary

It really is important to consider the intangibles. There have been plenty of studies showing how health affects earning power and expenditures, and how strong social relationships make life easier for people in economically hard times. A man becomes an island unto himself at his own financial risk.

And speaking as an entrepreneur, a love of positive assets is not what gets businesses started and money made. It is the intangibles – what you get out of the business emotionally, how you feel you are serving your customers and making a difference. When looking at a large population size, these intangibles really do end up having a “tangible” effect.

So thanks for the insights, Trent, I thought it was great!

Then I asked myself: If I had a life-threatening emergency, who could I count on to give me a substantial amount of money if I really needed it to survive? (Of course, there’s no way I’d ever ask unless it was this serious.) I was absolutely astounded by the list.

I know it sounds too much like “It’s a Wonderful Life” but in the end, all of our financial net worths depend on the good will of the people around us. If our social networks, communities, institutions (including banks) all fail to honor basic interpersonal commitments, we really have no “money” at all. Money is just an abstract idea that represents our social networks.

This post is pretty ridiculous in my opinion. I often dislike the “softer side” posts (the ones that are full of sentimental ‘dear diary’ style comments about how “watching the sunset makes it all worth while…”) – but this one goes beyond the softer side and attacks the logical and concrete side altogether. As mentioned, “net worth” is well defined and well understood by virtually anyone with a high school education.

Now, i totally agree that there is more to life than net worth – but let’s not redefine ‘net worth’ just to cheer ourselves up. Look at your net worth, then realize that the number staring back at you (positive or negative) is not indicative of if your life is good.

Maybe you should use your creativity to come up with a new term.

Your family bonds and health would have “spillover benefits,” meaning that they have value that effects the financial net worth, but would not be reflected in an accounting ledger.

Poor health, by contrast, would have “spillover costs.”

Without cash inflows this is meaningless.