Household or individual NW?

[Mr. Tightwad]

Are you preparing for divorce?

It happens more often than not.

 

[rodi]

When I calculate NW, which isn't often, it's household. Since I don't plan on selling the house, nor divorcing the hubster... It's not a useful number to me.

Like Ronstar, I calculate the portfolio at least weekly. By portfolio - that means investible assets in investment accounts, retirement accounts, etc.

A few times a year a do an all-in networth... and include things I don't include normally - like the 529's for the kids, the HSA accounts, and the low interest savings accounts, as well as a guesstimate on the real estate. Even then I don't include assets like cars, and other stuff.

But I always do it by household. In a simple view it could be looked at as divided in half for individual. But in reality, in a divorce, it isn't since I have an inherited IRA and larger retirement accounts. (Yes - I'd have to share some of the retirement accounts if divorced.) But no plans to ever get divorced....

 

[Dtail]

As do we.

Same here.

 

[kgtest]

HH. But really depends on who is asking, and why.

The way "we" see it, we built this together, and we will spend it together.

I think it plays into how we view equity as a married couple as well...some get it confused with equal, or half or whats his and hers is mine etc etc...


it's ours, and we are blessed.

 

[The Cosmic Avenger]

Are you preparing for divorce?

Not really, just curious, since we often see people have slightly different takes on what defines net worth. It might take another thread, but I'm also curious what non-monetary assets people might include. For example, I have no idea what the fair market value of our vehicles might be, and I don't think I'd be interested in tracking it. Meanwhile, Fidelity and USAA have ways to include a Zillow valuation or manually enter a market value for your real estate. But we also have a piece of jewelry that was appraised at $10K, which is a nice round number and the value is probably pretty stable, but I don't include that simply because I have no idea how I would sell it even if I wanted to. Plus adding the value of household items feels like a slippery slope.

 

[LRDave]

I guess it would be household, but I am not sure of the value even calculating NW. So I've never done it.

 

[Gumby]

Not really, just curious, since we often see people have slightly different takes on what defines net worth. It might take another thread, but I'm also curious what non-monetary assets people might include. For example, I have no idea what the fair market value of our vehicles might be, and I don't think I'd be interested in tracking it. Meanwhile, Fidelity and USAA have ways to include a Zillow valuation or manually enter a market value for your real estate. But we also have a piece of jewelry that was appraised at $10K, which is a nice round number and the value is probably pretty stable, but I don't include that simply because I have no idea how I would sell it even if I wanted to. Plus adding the value of household items feels like a slippery slope.

I count financial assets and the house only. All the other stuff we have is not worth a hill of beans to anyone but us. As "The Millionaire Next Door" reminded us long ago, just ask an auctioneer what all your possessions will bring - the answer is pennies on the dollar compared to what you paid. So I don't count any of it.

 

[Ronstar]

That's interesting; if you don't mind being specific, what assets do you have that you don't know the value of?

2 cars, truck, furniture, atv, bikes, mowers, tools, clothing, etc, etc. Not a lot of value in the grand scope of things, but things that are normally included in ‘net worth’ as taken literally per accounting principles.

 

[The Cosmic Avenger]

I guess it would be household, but I am not sure of the value even calculating NW. So I've never done it.

In my opinion, it's useful for people like us feeling superior to those who are up to their ears in loans so that they can have a fancy new car every few years and a fancy house and other things beyond their means that they feel conveys status. It can help remind us of why we don't do that, but generally among those of us here, it's probably not that useful...except that I'm seriously considering relocating in retirement, in which case the house would be sold, and so NW would be at least slightly more relevant than it is now, especially if we decide to rent or just travel for a while while we see what we want to do long-term.

 

[tmm99]

I've always calculated NW on an individual basis for myself, but that's because I've been single and living alone for pretty much the entire time I've been wealthy enough to routinely keep track of my NW.

I was single for so long that I still calculate everything with just my NW although it's been 6 years since I remarried.

 

[Andre1969]

To me, it just depends on how co-mingled your finances are. I always considered my Mom and stepdad to be a single "unit" when it comes to their net worth. Same for both sets of my grandparents.

But, if my uncle comes to live with me in his old age, I wouldn't consider him and I to be a "household" or, for lack of better word, "unit". Even though, if we share the same address, the government might consider us to be one, I guess.

 

[Navigator]

My wife and my finances are so co-mingled that I am not sure I could calculate an individual net worth for each of us, unless I calculated household net worth and divided by 2.

 

[RunningBum]

I was single for so long that I still calculate everything with just my NW although it's been 6 years since I remarried.

I've been single for about 25 years. It just occurred to me that in a recent conversation my GF said if we ever got married or moved in together, she wants to keep finances separate, and have a prenup. I wasn't sure how to approach that, so it sounds just fine to me. So, I'd still be calculating just my NW if we get to that point.

 

[Dtail]

DGF and I share all the expenses together and have some joint accounts and some single 401k/IRA accounts.
Since we are not married, it could be theoretically trickier. More of her monies will be used until 70 y.o., then much more of my monies from thereon.

 

[pj.mask]

We both work and keep net worth separate. We both contribute to joint account to pay for living expenses. We split costs even with a slight income tilt (non-essential purchases made by higher income). Gifts, cars, and high $ personal expenses (jewelry, gaming computer, etc) come from individual accounts.

Part of this is we have different timelines for work. If I want to quit early I need my savings to still cover my contribution. Back when, we both didn’t want the power dynamic of being forced to rely on the other and have tried to be equal partners.

But money has never been an issue between us. I think it would be harder to commingle if one spouse wanted a $80k lux car and another wanted a $15k Camry so they could save the rest.

 

[jfn111]

We've been married for 37 years so household net worth.We also use Fidelity aggregator so we have our house value plugged in, no mortgage, but don't include vehicles or anything else that would take time and effort to sell.

 

[GravitySucks]

When married it was household. Still is I guess but im a household of one.
Count everything in Fido. Some days I'll add in the house.
I consider the toy car even though it's only worth about $5k. It's separate as it will eventually be sold and used to buy a different toy car.

 

[jebmke]

Estate tax treats joint taxpayers as one unit so that is what we do. I only do this calc once a year to update the attorney. Otherwise I only look at portfolio piece.

 

[2017ish]

In our case, household for everything financial. We've been together since 18&19, and married since our early 20s, when we were still in grad school; so we started out well below zero together.

I can definitely see other situations, as noted above, in which one would take a different approach.

 

[jkern]

Not really, just curious, since we often see people have slightly different takes on what defines net worth. It might take another thread, but I'm also curious what non-monetary assets people might include. For example, I have no idea what the fair market value of our vehicles might be, and I don't think I'd be interested in tracking it. Meanwhile, Fidelity and USAA have ways to include a Zillow valuation or manually enter a market value for your real estate. But we also have a piece of jewelry that was appraised at $10K, which is a nice round number and the value is probably pretty stable, but I don't include that simply because I have no idea how I would sell it even if I wanted to. Plus adding the value of household items feels like a slippery slope.

My interpretation of NW is that it is a number that's just for fun. I don't use it for any financial planning purposes. Therefore, I include my primary residence and personal property. Since NW isn't used for anything, I don't track the value of personal property. I just assign it a number between $50K to $100K depending on when I last replaced my car or furnishings.

 

[CRLLS]

We both work and keep net worth separate. We both contribute to joint account to pay for living expenses. We split costs even with a slight income tilt (non-essential purchases made by higher income). Gifts, cars, and high $ personal expenses (jewelry, gaming computer, etc) come from individual accounts.

Part of this is we have different timelines for work. If I want to quit early I need my savings to still cover my contribution. Back when, we both didn’t want the power dynamic of being forced to rely on the other and have tried to be equal partners.

But money has never been an issue between us. I think it would be harder to commingle if one spouse wanted a $80k lux car and another wanted a $15k Camry so they could save the rest.

Emphasis above is mine. I'm just curious about couples in this dynamic, how would they deal with a sickness, either long term or not. The whole not wanting to rely on the other financially, seems to me to extend beyond just the financial realm. I know for us, I supported DW retiring years before me. Then later on, DW went back to work when I could not find meaningful work after being laid off. Sort of a give and take. not just an equal partnership. Sometimes I contribute more, sometimes DW does. It balances out over many aspects of our lives and over time. It is jut the way we are.

As I stated earlier, we are a "household NW" group. We are together for the duration.

Don't get me wrong, I am not saying separate accounts or separate goals are bad. I just don't understand the dynamics and how much beyond finances, that separation extends in a relationship. Maybe this should be in a different thread?

 

[Gumby]

I figured when we got married in 1984 we were mutually pledging that the other could rely on us, financially or otherwise. And that is what we have done. So, I worked full time while she went to graduate school, then she worked full time while I went to law school. Since then, sometimes I made more money and sometimes she made more money. It doesn't matter in the end. Everything we've done, we've done as a team. Now, we are enjoying "our" money.

 

[audreyh1]

Estate tax treats joint taxpayers as one unit so that is what we do. I only do this calc once a year to update the attorney. Otherwise I only look at portfolio piece.

This is a bit confusing because estate tax exemptions are per individual and tracked individually if gifts in excess of $15K per year are made. Each individual must file a gift tax form.

 

[jebmke]

This is a bit confusing because estate tax exemptions are per individual and tracked individually if gifts in excess of $15K per year are made. Each individual must file a gift tax form.

Yes; I should have clarified. All our individual assets go to each other in case of death. Also, individual exemption applies to joint assets if you gift them.



I took the question as a reference more to retirement sustainability. I don't use NW for retirement purposes because I exclude all hard assets (and when I was working, I excluded things like in-the-money stock options and my deferred comp balance) when looking at retirement.

 

[pj.mask]

CRLLS - if one of us needs help, then plans have changed and we need to re-evaluate.
We talked about this the other week with potential job losses. My understanding was neither of us have problems providing basic living for the family and plenty of creature comforts (our current family budget is around 100k). I think if we are sick there will no longer be a focus on the additional 5 figure annual shopping that currently makes it easier for us to keep things separate; out of sight and out of mind.

The higher earner is also the higher spender and net worths are basically equal and growing at similar rate so while it may be more difficult if the situation was different, for us this hasn’t been an issue.

Even if divorced, I think we would both be there for each other emotionally and financially as so long as we have kids, we are family.