DIY, Financial Wellness at Work, Chapter 3

 

Photo Credit: Benold Financial Planning

Recently, I set up a Slack channel at work described thusly:

"An information and learning commons to jointly develop the financial acumen we fear we don't have." 

 I did it because the issue of not knowing where to start had emerged as a theme in both random discussions and on our annual employee survey.  After a lifetime spent managing the financial affairs of small businesses and nonprofits, I figured I've learned enough to lead self-help discussions. I don't think of myself as a financial expert, just a knowledgeable amateur. 

February 13, 2022 - Net Worth, What's Yours?

On January 3rd, Jeff Bezos had a net worth of $195 billion dollars. Between February 3 and February 5, Mark Zuckerberg's net worth fell $30 billion  dollars. 

What's your net worth? Do you know? Why should you care?

Applying for some forms of personal loans requires filling out a net worth statement-- in other words establishing what you own versus what you owe. Lenders care about your income, but they also care about whether your have assets that you can rely on to pay them if times get tough. That's actually one of the reasons nonprofits have such a difficult time getting lines of credit or working capital loans... all too often, they don't own anything of value that can be be put up as collateral.

Photo Credit: Path Solutions

But back to you...why should you care about your net worth? 

Simply put, "It’s sort of like tracking your weight as part of an overall fitness plan." It helps you know where you stand today and whether you are getting more fit over time. All by itself, it doesn't mean you're healthy, but it is one of the dashboard items that helps you monitor your health--in this case, your financial health.  

As a first step towards financial wellness, you could put aside a half hour to calculate your net worth. It's not hard. Here is one calculator that you can use.         

One thing I like about what the creator of this spreadsheet, David Weliver, says is this: "Your net worth is less important than your net worth trend. It’s important to ask: "Is my net worth going up or down?" He recommends tracking your net worth monthly. I'm just not that much of a fanatic. In this lazy woman's estimation, once a year is plenty good enough.

Another important point to remember -- it isn't your income that determines your net worth. In fact, income doesn't even come into the equation. And...some perspective: At different points in the life, you should expect to have different levels of net worth. 

The day you get your Masters or J.D., you may have negative net worth because you have sizable student loans. After 10 years of making faithful payments while working in public service (nonprofits, government, schools)--when your loans are forgiven because you are participating in the PSLF program--your net worth will be decidedly more positive.

I can't resist a plug for Homebase here, either. The new student loan payment benefit helps to improve a person's net worth every month by paying down debt.  At the same time, our 5% matching 403(b) contribution increases that person's assets.

 (Assets  - Debts = Net Worth) 

This chipper video may or may not appeal to you--but it does have the benefit of being a bite-size and easily digestible look at net worth.  

 It also contains a truly astonishing fact. "For folks under 35, the average net worth is $76,300. But the median net worth is only $13,900.

Less chipper and more meaty is this Nerd Wallet video--which also contains an important look at why making minimum credit card payments in order to keep money in the bank is a losing strategy.  Something I learned about in collecting these links: The FIRE movement. It's covered in the Nerd Wallet video. I realize now that I actually know at least one devotee. He's a man with a plan.