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What Constitutes True Net Worth?

Do you know what you are worth? Is it that important, anyway? Net worth is taking center stage as many financial bloggers publicly track theirs monthly. There is even a website,, where you can “track, share, and compare” your net worth with others on the site. This is taken to a bit of an extreme in my mind, but the sad reality is that most of us are clueless when it comes to knowing our net worth. We blindly acquire assets and incur debt without knowing its impact our bottom line.

So what exactly is net worth? It is the number you get when you subtract your total liabilities (everything you owe) from your total assets (everything you own). It is a point in time measurement, as it typically changes daily, and is an important financial planning tool, especially when it comes to planning for financial goals. Ideally it should be a positive number, where you have more assets than liabilities. Net worth is an informative barometer of your overall financial health. This is particularly important in terms of the direction it is heading, and it is recommended that you monitor it quarterly or annually.

Unfortunately some people confuse net worth with self-worth, and any discussion about net worth begs the question, “What really is true wealth anyway?” I invite you to broaden your notion of net worth, and want to share some expansive thinking about assets and liabilities from two mentors I have studied with.

One mentor, Spencer Sherman, financial planner and author of The Cure for Money Madness, offers a unique tool for assessing net worth from a more holistic viewpoint—what he calls actual net worth. For example, we so often take our health for granted—which is actually our most precious asset. Sherman challenges us with the question, “Would you prefer to be a sick billionaire, or a poor person in excellent health?” Given that most of us would prefer the latter, he surmises that health must have a monetary value. So, in addition to the monetary assets included in a traditional net worth statement, Sherman’s actual net worth worksheet includes human assets, such as health, potential lifetime income, untapped skills and creativity, friends and family, and service to the world.

Another mentor, Mark Silver, who teaches a course entitled, “The Heart of Money,” questions the concept of liabilities in a similar way. He views financial debt as a dependency on others for a service or item previously provided. He asserts that all of us have liabilities/dependencies, even if they are not financial in nature. He asks us to examine our lives and find areas of dependence where we owe something that feels emotionally uncomfortable to us, or where we feel indebted in some way. He challenges us to look at how this is impacting the net worth of our lives.

Approaching net worth in this holistic way keeps things in perspective, and provides an opportunity for us to embrace all our assets, as well as an opportunity to evaluate the cost of carrying non-financial liabilities in our lives. It also reminds us that focusing purely on money as a measure of net worth is an overly simplistic and potentially devaluing vantage point.

Financially Smitten Call to Action for You Today:

Visit Spencer Sherman’s website and download his actual net worth worksheet. It is available for free on his home page. Take some time to complete it and reflect on what it’s like to know your actual net worth number. Then, consider any non-financial liabilities or debts you are carrying that are diminishing your bottom line. Are there any situations and/or relationships that feel like debt to you—in time and/or energy? What steps do you need to take to unburden yourself from this indebtedness?