You’re missing a key part in your net worth calculations! You’re richer than you think you are. I’ve been critical of J Money’s monthly net worth updates for years now. Every month, he keeps us up-to-date on his net worth increases on his popular personal finance blog, Budgets Are Sexy. It makes me depressed about my own lack of large numbers when it comes to my net worth.
Don’t get me wrong. I’m not mad, and I know that I shouldn’t be comparing myself to others. We’re all in separate places with different goals and situations in life. But, I can’t help but continue to dwell on J Money’s net worth updates when he posts them every month.
But, this time, I think I’m onto something. I think that he’s forgetting something, and subsequently so am I. We all might be forgetting something in our calculations. We all might be richer than we realize! Are you making this key mistake when you calculate your net worth? I bet you are, and you’re not alone.
Maybe there is more to these net worth numbers and the simple calculations of our assets and liabilities. I think J Money is unrepresenting his net worth and leaving money on the table. I think we all are. Our net worth numbers can be even larger, and maybe some of us are closer to J Money than we think.
You’re Leaving Out a Few Assets
Where do you draw the line on what is an asset? We all understand thanks to J and his posts that to calculate your net worth, you simply subtract all of your debts from a list of assets like your home, investments, and your cars.
But, we are leaving out key assets to our calculations. It struck me when I had an argument with my friend Blake a few months ago whether or not your cars deserve to be included in your net worth as an asset. It does! I agree with J in that respect. My friend was leaving out his cars as an asset, but he was surely including his car loans in the list of liabilities. This greatly underestimated his net worth.
So, that got me thinking about other assets that we typically do not include in our net worth calculations. I think that we are a little better off in our wealth than we all think.