What Does Net Worth Mean, and How Does it Affect My Marriage?

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You may have heard that you and your partner should have some financial goals. You are combining your finances, so you should be able to get further together than you could when you were single.

Well, today I’m going to introduce you to a fantastic barometer of your overall marital financial picture. This measuring stick is called "net worth".

 

What does net worth mean?

Net worth is the measure by which your assets exceed your liabilities. In simpler terms, it’s the value of everything you own minus any debts you may have.

If you were forced to cash out everything you owned (bank accounts, your car, house, etc.) and pay back your loans, how much money could you come up with?

This is called net worth, and it’s a measure of your marriage’s worth (only in a financial sense).

 

How to determine net worth

Figuring out your net worth is relatively simple. Here's how to do it:

On a piece of paper or a spreadsheet, start a label that says “Assets”.

Now, list out all of your bank accounts, retirement funds, value of your cars, value of your home, your HSA, etc.

Next, find the value of each of those things and write it in next to it. For some of your assets, like bank accounts, this will be very easy to find.

For others, like your cars or home, you might have to do a little research. For instance, check out Kelley Blue Book to get a figure for what your car’s value is.

After you have finished all of your assets, it’s time to start the label that says “Liabilities”. These are all of your debts or money that you owe to someone else.

This list should include any credit card debt, student loans, your mortgage, what you owe on your car, or any personal loans outstanding. Write down the amount you owe on each.

Now that you’ve got all of your assets and liabilities written down and valued, you can put in the simple equation:

(Total of your assets) - (Total of your debts) = Net Worth

Way to go! If this is the first time you’ve calculated your net worth, then this is your baseline! Make it your goal to only increase that number from here on out.

 

How does this number affect my marriage?

I’m not here to tell you that if your net worth is greater in value, then your marital satisfaction will improve. There isn’t necessarily a direct relationship there.

I am here to tell you that net worth can be an important indicator to track in marriage so that you know what progress you’re making in your financial goals.

I track our net worth every month, because I like seeing the progress each month. But you wouldn’t have to do that. Try tracking it each quarter to see where you’re at.

 

How do you increase net worth?

Invest in assets that earn a return. Focus on investments like retirement accounts and investment accounts, and understand that purchases like cars are going to depreciate and not be a driver for increased net worth. Spend less, save more, and watch your net worth skyrocket. 

The greater your net worth...the greater your retirement potential, the greater your financial freedom, and the greater your legacy. Keep building towards a higher net worth with your spouse and enjoy hitting goals together!