Every month, I spend some time on a personal finance statement. I’m careful to include the current balances on all of my debts and assets, then I add up the assets, subtract the debts off the top, and wind up with a number that, in one single value, represents my financial standing in the world.
I often wish that, when I look at my balance sheet at the end of the month, the difference between my assets and my debts was substantially larger. I would love for that number to be big enough for me to declare true financial independence.
But that number is not my net worth. Nor should it be yours.
The common terminology for that number is net worth, but I’ve always found “net worth” to be a strange way of expressing the idea. To me, the mere sum of one’s assets minus one’s debts is a good financial indicator, but it’s far from what I would call “net worth.”
As I take a look down my list of assets, I see things like our home, our savings and checking account balances, our retirement accounts, and so on.
But are those really all of our assets?
I view our close family and friends as major assets. These people help lift us up through thick and thin. They provide great friendship and social situations when times are good, and are there for encouragement (and more tangible help) when times are bad. Certainly, they’re an asset in our lives.
I look at our health as an asset. We’re all in good health. My wife and I are able to earn money because of our good health.
I view The Simple Dollar and its audience as a huge asset. Both provide constant encouragement for me to keep a strong focus on my financial health, plus both inspire me to greater things.
There are many other things in my life that are assets, too, that don’t show up on a balance sheet: our extended social network, the body of knowledge and education that my wife and I can draw on, our talents – these are all assets that can’t be truly quantified, but they all contribute significant value to our lives.
The same type of thinking continues as I move down to the debt part of the balance sheet.
I’m indebted to a lot of people for things they’ve helped me with in life. If called, I would gladly help any of those people with virtually anything they asked for.
I feel a great deal of spiritual indebtedness to the people and things in the world around me. I feel as though it is my responsibility to do what I can to make the world a better place.
I owe quite a bit of time to various groups and responsibilities – and, as you know, time is money.
To put it simply, my real net worth is more than just a sum of financial assets and debts. Compared to the wholeness and beauty of life, one’s financial net worth is just the beginning.