Episode 16: Net Worth: Why it does and doesn't matter

Mar 9

Do you know your net worth, how to calculate it and why it’s significant?

In this episode, I am diving into all things net worth. I will teach you how to calculate your net worth, why it’s important and why it's actually not the most important number to track in your financial life.

By the end of this episode, you'll better understand what net worth means for you and how to prioritize it compared to other aspects of your finances.

Key highlights

[00:00:07] A recap of my weekend

[00:01:02] Introduction to today’s topic: Net worth

[00:03:47] What is your net worth?

[00:05:54] Why does your net worth matter towards your financial health?

[00:09:11] Facts about net worth: Fact number 1: your net worth is going to go up, and it is going to go down frequently.

[00:11:55] Fact number 2: Your net worth doesn't always reflect what is actually happening in your financial life

[00:15:30] Net worth is only important when leaving a legacy

[00:17:30] Average net worth by age according to Federal Reserve in 2020

Notable Quotes

Your net worth is important because, ideally, we want to turn your assets into future income. After all, the goal is that, at some point in time, you don't want to trade your time for money anymore.
You could have a net worth of $100, 000 but if you have enough passive income coming in that actually pays you, so you don't have to work, you have complete financial freedom.
A high net worth is only important if you want to leave a legacy. If you aim to pass on money after you die, accumulating a large net worth is crucial.
Your net worth may not always matter if your assets are not generating future income. Time freedom is more valuable as it allows you to do what you want, with whom you want, whenever you want.