Do you know your net worth?
Do you know how to figure out your net worth?
Do you even care?
What Is Net Worth And Why Does It Matter?
Net worth is basically that which you’ve stored up here on earth. It’s the tangible things that you have to show for all your work.
I understand that it might seem funny, or even sacrilegious, to be discussing this with pastors. After all, doesn’t the Bible say to store up treasures in heaven and not here on earth? Well, yes, but it also says to learn from the animals that store up food for the winter.
I believe (and I think the Bible supports it) that it is wise to have some stores here on earth, but our focus should be on storing up treasures in heaven. And I don’t think anyone embodies that better than pastors. No one goes into the ministry for the money. But you still need money to live here on earth, especially in your golden years when you are unable to earn an income.
So, back to net worth. I think it is a good idea to calculate your net worth from time to time because it is useful for checking in on financial goals that you have set for yourself. Also, the trajectory of your net worth over time reveals a lot about what kind of steward you are of the resources God has entrusted to you.
How To Calculate Net Worth
Your net worth is a lot more than just the balance of your bank account. Your earthly treasures also include things like retirement accounts and the value of your house. But, wait, you don’t completely own that yet. How does your mortgage play into it? Or other debts, like student loans?
The basic net worth equation is:
Assets – Liabilities = Net Worth
Your assets are the things you own. Your liabilities are the things you owe. The difference is your net worth. You’d be surprised how many “rich” people out there actually have a negative net worth because of all the debt they’re swimming in. Just like God doesn’t look on the outside, net worth goes far deeper than appearances.
How To Create A Personal Balance Sheet
You can calculate your net worth by putting together a personal balance sheet. Balance sheet is an accounting term. It is a document that lists assets on one side and liabilities and net worth on the other. It’s called a balance sheet because the two have to be equal and balance out.
Assets
To start your own personal balance sheet, first list out your assets. Assets are things you own and can be divided into financial assets and personal assets. Financial assets include:
- Cash
- Bank accounts
- Money market accounts
- Certificates of deposit
- Retirement accounts: IRAs, 401(k)s, 403(b)s, ESOP
- Brokerage accounts
- College savings accounts
- Health Savings Account
- Stocks
- Bonds
- Savings bonds
- Life insurance cash value
- Annuities
Personal (nonfinancial) assets include:
- Primary residence
- Second or vacation home
- Rental real estate
- Land
- Business ownership
- Vehicles
- Jewelry, artwork, collectibles, tools, furniture, and other possessions
Liabilities
Next, you list your liabilities. These are your debts. They include:
- Credit card balances
- Balances on other lines of credit
- Mortgages
- Car loans
- Furniture or appliance loans
- Retirement account loans
- Life insurance policy loans
- Unpaid medical bills
Net Worth
Once you have all of your assets and liabilities listed, total each one. Subtract your liabilities from your assets and you end up with your net worth.
What Is A Normal Net Worth?
That heading was a trick question because, as you should know by now, there really isn’t a “normal” anything. It’s unwise for a 25-year-old just starting a career to compare their net worth with a 65-year-old about to retire after 40 years in the workforce. It’s also unwise for a pastor to compare their net worth with that of the doctor in their congregation. Remember, you didn’t get into this for the money.
However, I’m always curious about how I personally compare to averages. So, if you’re curious too, go ahead and keep reading. The Federal Reserve’s Survey of Consumer Finances found that the average net worth of all US families is $692,100. Now, before you start crying, remember that that includes all of Hollywood, Silicon Valley, and every NBA star.
If you look at the median, those in the 50th percentile, their net worth is a much more palatable $97,300. Still, that includes households of every age. Here is a breakdown by age:
Age 35 or younger: $11,100
Age 35-44: $59,800
Age 45-54: $124,200
Age 55-64: $187,300
Age 65-74: $224,100
Age 75 or older: $264,800
Even though I just gave you some numbers to compare yourself too, I’m going to tell you not to compare. Everyone has different goals and needs. If you have a special needs child, you will likely need to build a larger net worth in order to provide for them. If you opted out of Social Security, you will need to build a larger net worth to cover yourself once you retire. If your dad is a billionaire and you’ve seen his will, you might not need as much.
Every situation is different, so you should really only compare your net worth to your own personal financial goals. How are you doing with what God has called you to?
Net Worth Tools
If you want a quick and easy way to calculate your net worth, check out our calculator:
Or, if you want to personalize it and track your net worth over time, I made you a downloadable Excel spreadsheet. It already has some numbers in it so you can see how it works, but just replace them with your own information. Here you go: