Do you include savings/checking account in net worth?

[Amethyst]

I'm wondering too. Does a higher net worth get you access/entry to anything?

Help me understand the reason why one needs to know the exact value of one's net worth? I mean what's the purpose for ? Except to participate in polls online.
Of course I know the strict sense of the accounting term, I was once an accounting major. While we are at it? Determine net worth. Should I add my frequent Miles awards to my net worth too?

 

[Fermion]

I'm wondering too. Does a higher net worth get you access/entry to anything?

More taxes in some countries.

 

[Nightcap]

Help me understand the reason why one needs to know the exact value of one's net worth? I mean what's the purpose for ? Except to participate in polls online.
Of course I know the strict sense of the accounting term, I was once an accounting major. While we are at it? Determine net worth. Should I add my frequent Miles awards to my net worth too?

I need net worth to obsessively plug into online simulators like FIREcalc. Sure, the last two hundred times it said I was fine, but that might have been a glitch...

 

[bw5972]

Since, on ER, this number has no set meaning, any comparison must be taken in context.

When an $800K home is not part of one's net worth, the rest of the items that may or may not be included, is meaningless.
Savings account
Life insurance value
Cars
Realtime inflation/deflation amounts
Net sale differentials... taxes, attorney costs, commissions etc.
Assessed value of antiques, collections
Foreseeable gains/losses.

Naturally, if one's Net Worth exceeds $10M, the perspective of value will differ from the hopeful ER member who is feeling good about having attained a Net Worth of $300K.

The difference extends beyond this, for those of us who look to our net worth as the source of income for our waning days, and those who look to preserve their net worth... using only the investment income to live out their days.

We're all different. Good to know that despite the differences, we can all get along...

Yes we are all different but if we can't agree on basic terminology, discussions become muddled. We don't see topics like:

Do you include money from part time work in INCOME?

Do you include money spent on food in your EXPENSES?

 

[dallas27]

I include everything in my cash accounts, retirement, and home equity. Anyone who doesn't is playing a game on slanted numbers, which is also fine if that suits them. If you own expensive classic cars or jewelry, including their resale value would be perfectly normal.

 

[Koolau]

I'm wondering too. Does a higher net worth get you access/entry to anything?

Uh, yes. FIRE

 

[Koolau]

Help me understand the reason why one needs to know the exact value of one's net worth? I mean what's the purpose for ? Except to participate in polls online.
Of course I know the strict sense of the accounting term, I was once an accounting major. While we are at it? Determine net worth. Should I add my frequent Miles awards to my net worth too?

I'm not sure about "exact" - although "A job worth doing, etc etc."

I do a NW calc. every once in a while to see how my overall investments are doing and at the same time being certain I'm not withdrawing too much. NW gives me enough info about these two things in the aggregate to feel comfortable that I know where I am on this journey we call FIRE. I'm sure other folks do a much more rigorous estimate of their individual investment performances. I'm sure some folks also track their expenses to the penny every year. Some probably do both. I just occasionally do NW. Very lazy.

NW snapshots are close enough for me and THAT's why I do it. I can't speak for others nor would I quibble if others either don't do it that way or calculate NW a different way. Like most things associated with FIRE, we all have our ways of doing things and usually I don't expect anyone else to do it my way. Once in a while, however, I learn something by hearing how others here do it.

Regarding airline miles, I wouldn't know. I don't do airline miles. Of course, YMMV.

 

[audreyh1]

I track at my net worth over time, and against inflation (CPI-U). This lets me see how we are holding up, whether the nest egg is shrinking in real terms, etc. This might motivate me to modify my behavior.

 

[Amethyst]

I get how having more investable assets gets you closer to FIRE, but you can't live on your house, car, jewelry, etc. so I can't see why it matters how much those are worth. Oh well.

Uh, yes. FIRE

 

[kaudrey]

I include savings but not checking.

+1.

Checking is used for current bills, which I also don't count for NW. Totally personal preference; as it is just an "FYI" number for myself anyway.

 

[jollystomper]

We include both, but since checking - which is mainly used for our normal daily living expenses - represents less that 0.2% of our assets,the impact of not including it in calculations is negligible.

 

[travelover]

I get how having more investable assets gets you closer to FIRE, but you can't live on your house, car, jewelry, etc. so I can't see why it matters how much those are worth. Oh well.

Well, yea, but they can save you on rent plus car and jewelry rentals.

 

[David1961]

I do, mostly to be accurate. When I compare net worth with previous months and years, I want to be as accurate as I can be.

 

[kaneohe]

I get how having more investable assets gets you closer to FIRE, but you can't live on your house, car, jewelry, etc. so I can't see why it matters how much those are worth. Oh well.

perhaps you are moving from HCOL area to LCOL. Current house value will more than cover new house so you will have leftover cash.

 

[Koolau]

I get how having more investable assets gets you closer to FIRE, but you can't live on your house, car, jewelry, etc. so I can't see why it matters how much those are worth. Oh well.

Bing, bing, bing, bing! That's why I don't count those things in NW. I do count check book and savings in NW which was OP's question. YMMV

 

[imoldernu]

To run this by you...

Your understanding of net worth assessment your wealth varies, according to the way it has meaning for you.

In our later years, we look on it as a matter of security... What we'd need, if three or four years of nursing home care might be there in the neartime.

We use "real value"... What all of our assets will amount to if they are converted to actual dollars. That means the "NET" value, after ALL costs to convert are taken out.

Figuring on $90,000/yr, for nursing home costs, that would mean a total of $360,000 alone, for one person for four years.. Add to that the living costs for the remaining spouse, (perhaps $30,000/yr)... the broad numbers add up pretty quick.

Now, as to the house... Our plan is to move into the apartments in our CCRC.
Current cost/yr is $26.5K for 2BR 2 people. That includes 2 meals/day, free TV and internet, use of all facilities including health center, function rooms, and regular scheduled transportation to shopping and special events, and free transportation to medical facilities and doctors. Virtually no other necessary costs. We translate that to mean our $200K house will pay for about 7 years of living, in a place we know and like.

Understand how home, is home... but as physical ability to maintain it, along with the bills and repairs and general upkeep continue, then the responsibilities become daunting.

We've lived in our regular home (villa) in Liberty Village, for long enough to know the older people in the apartments and assisted living. Almost all of them were happy to give up the responsibilities of home ownership, to live a relatively carefree life, without stress, and to join in activities with people of their own age.

Going back 10 years, I'm not sure I felt this way then, but reality has set in, and the world has a different look.

 

[Amethyst]

Good explanation of one way of looking at a house.

To run this by you...

Your understanding of net worth assessment your wealth varies, according to the way it has meaning for you.

In our later years, we look on it as a matter of security... What we'd need, if three or four years of nursing home care might be there in the neartime.

We use "real value"... What all of our assets will amount to if they are converted to actual dollars. That means the "NET" value, after ALL costs to convert are taken out.

Figuring on $90,000/yr, for nursing home costs, that would mean a total of $360,000 alone, for one person for four years.. Add to that the living costs for the remaining spouse, (perhaps $30,000/yr)... the broad numbers add up pretty quick.

Now, as to the house... Our plan is to move into the apartments in our CCRC.
Current cost/yr is $26.5K for 2BR 2 people. That includes 2 meals/day, free TV and internet, use of all facilities including health center, function rooms, and regular scheduled transportation to shopping and special events, and free transportation to medical facilities and doctors. Virtually no other necessary costs. We translate that to mean our $200K house will pay for about 7 years of living, in a place we know and like.

Understand how home, is home... but as physical ability to maintain it, along with the bills and repairs and general upkeep continue, then the responsibilities become daunting.

We've lived in our regular home (villa) in Liberty Village, for long enough to know the older people in the apartments and assisted living. Almost all of them were happy to give up the responsibilities of home ownership, to live a relatively carefree life, without stress, and to join in activities with people of their own age.

Going back 10 years, I'm not sure I felt this way then, but reality has set in, and the world has a different look.

 

[jkern]

For me, NW is just a number for fun. It's not used for any purposeful calculations. I have to guess at the value of real estate and personal property, so it's not exact anyway.

 

[Callitaday2022]

Happy birthday

0

 

[Meadbh]

I get how having more investable assets gets you closer to FIRE, but you can't live on your house, car, jewelry, etc. so I can't see why it matters how much those are worth. Oh well.

My friends recently sold their house for $700K (no capital gains tax to pay in Canada) and moved to a condo in a gated community, which cost $450K. They are spending $50K on renovations to the condo. The $200K that they added to their portfolio will cover their expenses for approximately 4 years. They think it matters.

 

[audreyh1]

I do, mostly to be accurate. When I compare net worth with previous months and years, I want to be as accurate as I can be.

Right - for me the only use is self-comparison and tracking against inflation since I retired.

 

[calmloki]

For me, NW is just a number for fun. It's not used for any purposeful calculations. I have to guess at the value of real estate and personal property, so it's not exact anyway.

Real estate value in net worth IS a problem - kind of like the anticipated inflation rate we all happily pull out of the ether when using Firecalc. Property value figures large for us given our rental holdings. I used to use my best guess at the property values; now I use the "market value" shown on my property tax bill. It may not be accurate, but hopefully it lets me do a better "apples to apples" comparison of net worth when looking at our net worth over the years.