Is there something important about Net Worth? What’s meaningful and material about that number?  I wonder…

I just viewed a typical balance sheet, a financial statement that identifies assets, liabilities and a bottom line figure for net worth.  Net worth is a simple calculation: a total of your assets minus a total of your liabilities. Simply stated, all of what you owe is subtracted from all that you own.  A balance sheet is used in myriad financial situations to transact business (loans, real estate purchases, business ventures, etc.).  It is a test for solvency and ability to be in integrity with your financial obligations. Is it a valid or true test? Sometimes.

Net Worth is a value at a point in time. It is a stake in the ground measurement required for some next action toward an ultimate financial objective. Net worth meaning and material arise when a desired outcome requires that number.  A desired outcome may be specific, such as determining ability to satisfy a mortgage; or, it may be vague, such as estimating a future point to be comfortable to stop working for income.  In all situations net worth is filled with faith, un-measureable trust.

Expanding the perspective, what arises for you considering our financial systems are weak and wobbling? How valid, relevant and material are our typical financial measurements, such as net worth?  Do you know your new worth? Do you care? I wonder.