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What are You Worth? NerdWallet’s Financial Throwdown and Net Worth

How do you figure out what you’re worth? And does it always have to be about net worth?

One of the interesting features that NerdWallet has launched is a sort of blog “reality show.” In it, different people share their ideas about finances. The first challenge in these Financial Throwdowns covers the topic “How much are you worth?”

This is always an interesting question to ask, since it implies more to an answer than mere money. Many of the contestants started out by answering the question in terms of net worth. And that makes sense. Net worth provides a snapshot of where you are right now. It’s a look at one financial moment in time.

Your net worth can give you an idea of where you stand right, and provide you with insight into where you need to go next. Each of the contestants in NerdWallet’s challenges share their situations, and the judges provide commentary. Because each situation is different, it’s possible for readers to get an idea of what they might be able to do when faced with a similar situation. A lot of the ideas are sound: Pay down student loan debt, open an IRA, and other good thoughts about improving net worth.

But does your financial worth stop at your net worth?

Other Ways to Measure Financial Worth

Of course, your overall worth as a person is about more than just money. But even your monetary “worth” goes beyond your net worth. There are some factors to take into consideration as you think about your financial future:

  • Marketable Skills: I’m a big proponent of developing marketable skills. Even if you don’t think that you are in a very good position right now, having a skill that someone else is willing to pay for is a big deal. It means you have earning power, and you can improve upon your situation.
  • Contentment: You don’t need a high net worth to be happy. While it’s ideal to pay down your consumer debt as quickly as you can, you don’t need to stress yourself over whether or not you have a really high net worth if you are content with what you have. Think about what’s important to you. If you have enough money for your needs, and your most important wants, and you are preparing for the future, keeping tracking of a growing pile of money just isn’t that important.

While a growing net worth can provide a useful benchmark for you as you measure your financial progress, remember that it isn’t everything. Consider how you are investing in your best asset, as well as how you feel about your current situation. If you feel that you are on the right track, and making good progress, “keeping score” with your net worth isn’t necessary. The important thing is that you spend money on your own priorities, and create a lifestyle that you happy with. Most of us don’t need piles of money to do that.

What do you think of using net worth to measure financial progress? Are there other ways of measuring “worth”?

Written by Miranda Marquit

Miranda Marquit is a freelance writer and professional blogger, specializing in personal finance, small business, and investing topics. She writes for a number of financial web sites and blogs, and has been featured in numerous media. Read about life as a freelancer at MirandaMarquit.com and in her book Confessions of a Professional Blogger.

5 Responses to What are You Worth? NerdWallet’s Financial Throwdown and Net Worth

  1. I would argue for a metric that mixes balance sheet, cash flow and the amount of work you have to do to achieve that cash flow. Perhaps:

    -add the liquidation value of all non-income-generating assets (cash, personal home, cars etc.)

    -subtract all liabilities (debt etc.)

    -add the discounted value of all expected future cash flows

    -subtract the discounted cost of all expected future work to generate those cash flows billed at the average rate for your country (say $25/hour in the US).

    You could use T-bond rates for both discount rates. This is a little more mathematically complicated, but it would give you a very good idea of where a person stood.

    • Very interesting and involved! But it does look at an actual cash flow model, which would be useful for many. Thanks for chiming in 🙂

  2. This is an interesting exercise, but I’ve tried to disconnect my worth apart from money and materialsim. It is a good idea to tally up your progress once or twice a year, but obsessing over how big your pile of money gets doesn’t seem healthy.

    • I think you make a good point. It’s not about piling up possessions. I think that you make a great point for another way to keep track of your progress. Maybe it has something to do with measuring whether or not you can live the life you want. If you can meet your goals, or if you are making progress toward your goals, that could be a measurement.

  3. Great discussion yall! Your networth does not = happiness but it is important. Our new platform, PowerWallet.com helps people get a real-time picture of their networth and financial situation and then lets people set saving goals, spending limits and more. In addition to your standard Mint, we also offer customized coupons and bill pay alerts. All your financial needs in 1 platform for FREE. It has personally helped me establish where I am at when it comes to my debt, and how I can realistically pay it off, save for retirement and emergencies and I have realized where all my spending is going. But at the end of the day, your networth is not everything. You can’t take your money or material things with you once life if over but I agree with Miranda, it helps figure out how you can live the life you want to live.

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