What Am I Worth?
“What am I worth?” That question can imply different things, depending on your perspective. The world typically bases a person’s worth on appearance, possessions, and accomplishments. When thinking in financial terms, this is commonly referred to as Net Worth.
On the other hand, self-worth based upon the value God has placed on us is Christ-centered and goes way beyond what we can dream or imagine. So while it’s helpful to understand our Financial Net Worth, I would argue that it’s even more important to come to grips with our value to God. Here are a few examples of why we are valuable to God:
We are valuable because of who we are. We are made in God’s image, according to His likeness (Genesis 1:27 CSB). A long time ago, even before God created us and before He created this universe, we were the focus of His love.
God’s thoughts toward us are wonderful, and He has great plans for our lives! “For I know the plans I have for you”—this is the Lord’s declaration—“plans for your well-being, not for disaster, to give you a future and a hope.” (Jeremiah 29:11 CSB).
God considers you His very own precious child. “See what great love the Father has lavished on us, that we should be called children of God! And that is what we are!” (1 John 3:1 NIV).
I could go on and on trying to describe how much God loves us, and still not be able to capture the length and width and depth of His great love. So I’ll pause here and remind you that regardless of your Financial Net Worth, your value to God is immeasurable. It’s infinite! You are priceless!
Now, let’s dig into how to calculate your Financial Net Worth. I’m grateful that my parents taught me this concept as a young adult. I remember so vividly trying to make sure my financial house was in order before proposing to my wife. I calculated my net worth, had my adult budget put together - it felt so good to be able to look at those figures on paper, and understand where I stood.
I’ve also seen clients experience this same sense of hope and joy as they emerge from a valley of debt. I’ve seen their faces as they see their Net Worth change from a negative number to a positive one - transforming feelings of shame into feelings of joy.
Keep reading, and I will explain how to calculate your own personal Financial Net Worth. The formula is simple. Assets minus liabilities equals net worth. In business, you call this a balance sheet.
Assets
I like to begin by listing all of your assets - things you own. List all of your bank accounts: checking, savings, money market, Christmas Club - every single bank account that is yours.
Now add any investments you have to the list. Include any brokerage accounts, your 401K account with your employer, your IRA, your Roth IRA. If you’ve invested in your own business, list what that is worth. If you have a cash value on your life insurance policy, include that.
Then add in real estate; your home, land, vacation home, etc.
Next comes personal property that moves - things like cars, motorcycles, and boats.
Be sure to include personal property that is stationary - things like furniture, jewelry, antiques, coins, and other collectibles.
Liabilities
Liabilities are debts - money that you owe someone else. You’ll want to look back over your list of assets and make note of any debts that you have associated with those assets. For example, if you have a mortgage on your home, then your home is both an asset and a liability.
Let’s say your home is worth $200,000 and you owe $175,000 on it. You’d have a $200,000 asset and $175,000 liability, resulting in $25,000 equity.
Here’s another example. Let’s say you have a car that is worth $10,000 and you owe $12,000 on it. In this example, you have a $10,000 asset and $12,000 liability, resulting in $2,000 negative equity - meaning you owe more on the car than the car is worth.
Continue listing all of your debts, including credit cards, student loans, money borrowed from relatives, unsecured bank loans, medical bills, etc.
Net Worth
Once you have all of your assets and liabilities listed, you simply subtract all of the liabilities from all of the assets to calculate your Net Worth.
I realize there are a lot of words here. Dad used to ask me if I wanted him to paint me a picture when I was having a hard time understanding a concept. (I almost always wanted to say “yes,” but knew it was a rhetorical question.) So for those of you who, like me, understand better with pictures, I made a tool to help you with this concept!
You can download my free Consumer Equity Worksheet and calculate your net worth. The link will take you to my store, where you can “buy” this for $0.00.
I hope this is helpful to you and inspires hope for your future. If you need help understanding your Net Worth, book a consultation with me. I’d love to hear from you!
