Welcome to the Pursue You Podcast, where we are empowering you to continually reflect, design and pursue who you were created to be so you can give the gift of your best self to your family, community, and business!
The more I learn about money and financial wealth, the more intriguing it is to me. First, how you feel about money is often traced back to how you were raised and how your parents handled money. Second, I find it is challenging to find someone else to discuss money with for risk of judgement one way or the other. My goal for you today is to focus on your net worth as a baseline to start a conversation about money.
[7:28] If I am talking about money, I always want the conversation to start in discussing net worth. It is your measurement of money. It is the measurement of your financial wealth. Net worth is all that you OWN minus all that you OWE (aka your assets minus your debts). This spreadsheet will help you determine your net worth and track your progress. I suggest updating your numbers once per quarter to see how your net worth progresses over the course of a year. Tony Robbins always says, “Where focus goes, energy flows.”
[10:28] How does it work? Using the example of real estate, perhaps you own a house and have a general idea of what it is worth. I recommend being conservative regarding your home’s value. That is the asset. Then the outstanding mortgage goes into the “debts” column.
Example:
Conservative Home Value – $250,000
minus Mortgage Debts – $200,000
Net Worth = $50,000[12:08] Our financial picture is so much larger than a home. Here are some examples of other assets and debts.
-Car
-Checking Acct
-Savings Acct
-Investments
-401k
-Jewelry, Electronics, Art
These are all things worth putting down in your assets column. This number is what you can sell these items for, in used condition.
Examples of debts:
-Car Loan
-Student Loan
-Credit Card Debt
-Medical Debt
(What is the outstanding balance you owe as a result of what you purchased or a service you received?)
You are going to feel really proud after all of this? Or you are going to want to crawl in a hole, particularly when you have student debt. I want to share with you some statistics that I saw while reading and learning about money/wealth. In 2010 the average American’s Net Worth was $68.828. The only useful indicator with Net Worth is when it is grouped by age. Younger households have not had the time to accumulate wealth the way younger households have. Own your snapshot, it is not right or wrong. It is simply where you are right now. It doesn’t matter where you start. It is slow, consistent and disciplined.Set a date in your calendar right now to set aside 30 minutes to focus on your Net Worth.
[18:01] So what do you do when you have these numbers? That is for YOU to decide! For me, my goal is not to be a millionaire, but instead to have financial confidence. I discuss Dave Ramsey’s perspective and Chris Hogan’s books “Everyday Millionaires” and “Retire Inspired.” I suggest you look into both! In “Everyday Millionaire” he shares:
-79% of millionaires inherited $0
-79% did not attend a prestigious private college or University
-Only 1/3 of millionaires had a six-figure household income in a single working year
-Only 31% of millionaires averaged $100k per year
-7% of millionaires averaged over $200k in household income per yearThe message: Net Worth doesn’t come from making money and having big businesses but instead for consistency and discipline. Chris Hogan shares that retirement isn’t an age it is a number. It is the amount of money that will allow you to retire (aka do whatever the heck you want!). Net worth allows you to be in control of your future.
[24:37] My important keys:
1. Figure out your Net Worth NOW
2. Make up a goal!
3. Have a plan to work towards
4. Figure out how often you want to be checking in on your Net Worth. Get clear how you are progressing, month by month, quarter by quarter, year by year. How are you tracking progress towards your goal.
Hopefully today I have encouraged you to thjnk and talk about money. I hope I was able to start the conversation of where you want to be and to give you a pathway to get there. Gary Keller’s philosophy, “money is for the good it can do” is significant to me. At times I disagree that money can’t buy happiness. “When we spend our money in a way that gives us more time to spend how we see fit, the control we gain provides us with an opportunity to be happy.” Focus on your net worth. Talk about money. Make a plan for you and your family. I promise it is a worthy investment.
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