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Measuring Net Worth
Old 11-07-2019, 05:22 PM   #1
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Measuring Net Worth

How do you measure your net worth? Variables:

Government standards or other financial sources.
Male? Female? Household? Household size?
Average? Median?
Age: Specific or range?
Include home or not.

and other factors.... education, compared to salary, other variables... pension,Social Security, annuity, insurance policies, location (average COL).

No... It really doesn't matter but we all use "Net Worth" as a factor in planning, budgeting and setting our personal goals.

Do you have a source that you use as a standard for comparison?
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Old 11-07-2019, 05:45 PM   #2
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I use the estimated or actual value of total saleable assets minus liabilities. Keep it simple. It changes daily anyway.
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Old 11-07-2019, 05:46 PM   #3
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I don't really use net worth for much of anything other than making myself feel good.

I include all assets and liabilities, including home value... but not the imputed value of my defined benefit pension or social security... and not deferred income taxes on tax-deferred assets even though I know that technically* deferred income taxes should be included.

* like if I was doing a personal financial statement for a bank or other creditor.
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Old 11-07-2019, 05:47 PM   #4
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Net worth is the household assets (and liabilities) - including the house.

Net Investible Assets is what I use for financial planning. That doesn't include the house, the 529s, the HSAs... (Although I could argue for the HSA being included... money is fungible.)

It's by household... so in our case, I don't break it down per person.

I'm not providing this info, in this form to anyone... so it doesn't matter what form/standard is used.
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Old 11-07-2019, 05:50 PM   #5
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Quote:
Originally Posted by aja8888 View Post
I use the estimated or actual value of total saleable assets minus liabilities. Keep it simple.
+1

I use it only to compare net worth from one time to another.
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Old 11-07-2019, 05:53 PM   #6
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Quote:
Originally Posted by imoldernu View Post



...we all use "Net Worth" as a factor in planning, budgeting and setting our personal goals.




Not me. Living in HCOL area, home value becomes a disproportionate chunk that you canít spend and canít eat. I do track investable assets as a multiple of retirement expenses
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Old 11-07-2019, 05:54 PM   #7
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I calculate net worth like I learned in my college accounting classes and how we did it in business in preparing the balance sheet.

Net worth = total assets minus total liabilities. A snapshot at a specific point in time.

Itís a simple as that. So yes, the house is included. A balance sheet can be prepared for an individual, a household, a company - any entity that has defined assets and liabilities.

Pension, income, ss has nothing to do with the balance sheet. Those are income statement items.
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Old 11-07-2019, 05:55 PM   #8
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Not really. Maybe back of a napkin sketch if anything. I was a bit more "dialed in" a few years ago as retirement approached - - - sort of a belt and suspenders mindset. I focus more on our retirement mix of SS, pensions, IRA withdrawals, etc just to ensure all of our bases are covered.

Might get interesting in 2020 though. We're toying with the idea of moving to a neighboring state. While net worth to us has been a bit below the radar, I can see it rapidly appearing on the proverbial Doppler Radar as an incoming event should we begin dialogue with realtors, banks, etc.
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Old 11-07-2019, 05:59 PM   #9
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I'm not an accountant.

So I just add up the value of everything but not the house contents and that is my Net Worth.
It makes me feel good.

I then subtract the house, car, property I'm giving away, 10% of my rental property, and that I figure is my Retirement Worth. This number is what I use for knowing if I can be retired.
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Old 11-07-2019, 06:00 PM   #10
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I view net worth as one of those interesting but not that relevant stats (to be clear - I do look at mine), but as aja does, I keep it very simple. Add up the stuff I have and subtract out what I owe (for me it's just the mortgage). I give rough estimates to most possessions that I could sell (house, cars, jewelry, art, a little bit for electronics). I feel a lot better about a $4M net worth if my house is $700K than a $4M net worth if my house is $3.5M.

To me, it's the stuff I could sell tomorrow that I really care about (investments). I don't put a value on my $30K/year pension, I just know that my investments have to return Annual Budget minus $30K.

And as for comparison to some sort of standard, I haven't really found one, but it would be interesting to find one. In my experience on this board, people here are way, way over any sort of standard one may find out there (like the scarily small amount of $ people my age have saved for retirement).
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Old 11-07-2019, 06:18 PM   #11
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I use the investments and the house but not personal property including motor vehicles.
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Old 11-07-2019, 06:20 PM   #12
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True wealth isn't measured in money

Quote:
Originally Posted by imoldernu View Post
How do you measure your net worth? Variables:

Government standards or other financial sources.
Male? Female? Household? Household size?
Average? Median?
Age: Specific or range?
Include home or not.

and other factors.... education, compared to salary, other variables... pension,Social Security, annuity, insurance policies, location (average COL).

No... It really doesn't matter but we all use "Net Worth" as a factor in planning, budgeting and setting our personal goals.

Do you have a source that you use as a standard for comparison?
For gauging oneself against various categories of peers, there are plenty of data tables on this site:

https://dqydj.com/

The remarkable conclusion is that by any monetary measure I'm unremarkable. However, since I will be retiring on 31 December anyway, unremarkable looks pretty good to me.

Also, none of those tables counts my most valuable asset: my DW of 39 years is still hot.
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Old 11-07-2019, 06:20 PM   #13
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I do not currently own any nets, so I guess the answer is zero.
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Old 11-07-2019, 06:23 PM   #14
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Quote:
Originally Posted by aja8888 View Post
I use the estimated or actual value of total saleable assets minus liabilities. Keep it simple. It changes daily anyway.
Me too! Except I don't have any liabilities to speak of, unless I count the DW.

Actually I keep two sets of books. One is cash/stock/bank accounts, the other is physical assets like the house, cars and collectables. NW is the sum of the two. And yes, I count my primary residence in my NW since if worse came to worse, I could sell it and live in a tent (so to speak) and continue to eat for a good while.
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Old 11-07-2019, 06:26 PM   #15
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The only reason to add up net worth is if you have plans of liquidating everything you own, to live in a van by the river. Most of us won't sell the house until we are headed for senior care, so it really shouldn't be counted.

I count net worth as what cash you could come up with in a short time period, not annuities/pensions, or projected SS.
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Old 11-07-2019, 06:34 PM   #16
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NW huh? I like to follow the lead of a currently famous person. My net worth fluctuates depending on my feelings. As of now I'm feeling good so its very high. Tomorrow? who knows.
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Old 11-07-2019, 07:50 PM   #17
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I monitor net worth to see how our stash is keeping up after spending and inflation - whether we are growing, breaking even, or drawing down. I adjust for inflation since we retired. I may check a couple of times a year, more often if new market highs are reached.
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Old 11-07-2019, 08:06 PM   #18
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I don't really use net worth for much of anything other than making myself feel good.
+1 Because of that, I don't really compute it.

I do keep track of another sum that interests me more, although I don't call it "net worth" (because it isn't).That is the sum of my investment accounts and bank accounts. I compute and record that sum at the beginning of each month. The purpose for that is to reassure myself that I am doing OK and to compare with previous years. For example, I just looked at the November values for the past ten years and the only year when it went down, was in 2015 when I bought my Dream Home in cash. Even without considering cost of living increases, it is easy to quickly check and see that I am doing OK.

I don't include my home value, and here's why: Zillow and similar sites are notoriously unreliable in my area; can't really blame them, because the information they need for their estimates is not publicly available in my area. Anyway, they can be as much as a hundred grand off, or more. I suppose I could just guess off the top of my head what my house is worth, but that's just pie in the sky.

Besides, following the fascinating discussions of rodi and I think some of our other Californians this week in another thread, which I found quite convincing once I thought about it... if your house is paid off, and you are determined to never move no matter what, then actually as far as budget is concerned it really doesn't matter very much what it is worth.

The rest of what I own (2009 Venza, sloppy retirement clothes, etc) probably isn't worth a hill of beans, so I don't include that either. Also I don't include my pension or SS because of how I use the total that I am calculating. They aren't needed.
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Old 11-07-2019, 08:07 PM   #19
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When working in the finance field, net worth, assets and liabilities were my business life.

Upon retiring young, I never even think about such things. I'm okay on meeting my day to day expenses, and we're able to own numerous homes outright. I prefer to keep my life and my business dealings simple.

So my net worth is of no interest to me any longer. Neither are cellphones important to me.
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Old 11-07-2019, 08:12 PM   #20
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Cellphones are way more important!

I can ask android auto to take me to the best fish restaurant in a city I've never been to and it does -
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