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”?