When I was a kid, I asked my dad what our house was worth. He told me, and I thought about it for a second. Then the light bulb went off. I excitedly told him that he could make a bunch of money if we sold our house. He didn’t seem to share my level of enthusiasm and responded “Do you have any idea what I’m worth?”
I had never heard that phrase before. I wondered how someone could be worth something? You can’t put a price on human life…or can you?
That was my introduction to the concept of net worth, which isn’t necessarily the worth of human life but rather the value of the net assets that a person owns.
How Do You Stack Up?
If you’ve never wondered how you stack up against your peers financially, you are probably not human. You’ve likely looked up the prices of your neighbor’s home values and sales prices. You’ve eyed their new sports cars and tried to make sense of where they are financially.
Knowing where you fall does not have to be a mystery. Determining your net worth is the first step to figuring out where you’re headed and how you are going to get there. It will tell you if you’re on track to have enough to provide you with the type of lifestyle you want for the rest of your life.
Net Worth Explained
Net worth is a relatively simple concept. It is a snapshot of your total wealth at a given moment in time. In general, your net worth is equal to all of your assets minus your liabilities. While some measure success by income, the preferred yardstick of choice is typically net worth.
Assets can be broken out into two types: Liquid and non-liquid. Liquid assets include cash, savings accounts, retirement accounts, taxable investment accounts; these can be converted to cash quickly. Non-liquid assets include things like your home, real estate, business investments; basically, things that can’t generally be converted to cash overnight.
Liabilities are essentially your debts—and mortgages, credit card debts, or home equity lines.
If you were to sell off your assets and pay off your debts, whatever is left over would be equivalent to your net worth.
The most effective way to use net worth is to track your own progress. Comparing your net worth today to yesterday’s will tell you if you are heading in the right direction. If it increased or decreased, you can investigate why and take the appropriate action.
But let’s be honest. While we all know we should really only be concerned with ourselves, what we really want to know is where everyone else is at. So why don’t we take a moment to discuss?
The Ultimate List of Blogger Net Worth
The personal finance community is a peculiarly transparent bunch of individuals, at least in comparison with the average Joe. Hundreds of them frequently share their personal financial information online. Almost 200 of them have voluntarily submitted their net worth to Rockstar Finance’s Ultimate List of Blogger Net Worth.
So who are these people? Are they all rich? Why are they posting their net worth online for strangers?
After working in finance & accounting for several years now, whenever I see a set of numbers or data, I feel a strong compulsion to put them into a chart. The ultimate list of blogger net worth was no exception. I was scrolling through it one day, and my financial analyst inclinations got the best of me. Here is the result:
This is a basic graph plotting out every single blogger on the list according to his or her net worth.
The median net worth of this group of 185 bloggers is $167K. That’s about $100K more than the median net worth in the U.S. Keep in mind that this group consists of people of all ages, different family circumstances, and even different countries.
Grouping the bloggers into income ranges using a histogram yields this view:
The main thing that pops out at me from this histogram is that over 25% of these bloggers have a net worth between $0K and $100K, which is by far the largest group.
This graph shows the cumulative net worth. It’s just another way to show the data. For example, looking at the 11% intersection shows that 11% of the bloggers have a negative net worth.
Looking at it another way, over 89% of us have a positive net worth. That is a several points higher than that of the general US population.
The difference is not surprising given that our list of bloggers is not even close to a nationally representative sample. Though we are your average office workers, entrepreneurs, moms, dads, and 28 year-olds living in mom’s basement, we are constantly tracking, striving to improve, and talking about…our net worth.
But isn’t that a little bit self-centered and narcissistic?
There is a New Yorker cartoon showing a wealthy man at a fancy dinner saying “Money is life’s report card.”
Is that what these bloggers think? Are they just flaunting their wealth?
The short answer is no, not even close. So what’s it all about then? Read on, my friends.
Who Are These Bloggers?
I reached out to a few of the bloggers on the Ultimate List of Blogger Net Worth to get their perspective and learn a little more about what makes them tick. They are all at different stages in their lives. They come from different places and have different goals.
The one goal they do have in common, though, is their enthusiasm for getting out of debt and cranking up their net worth. Though their reasons for doing are often similar, they’re not always the same. Here are a few of the reasons I was able to glean.
If you take a look at the first graph above, you’ll see that a small portion of the bloggers who post their finances actually have a negative net worth. If you think it would be hard to post a positive net worth figure, just imagine the courage it takes to put it out there when it’s negative.
Rebecca (net worth $-31K) from Stapler Confessions is one of those bloggers. One of the main reasons that she publicizes her net worth is to be honest about where her family of 4 is in their financial journey. “Net worth is something so taboo to talk about among friends and family,” she says, “but if we were more open about our personal finances, I think our wisdom from lessons learned could really help each other.”
So much of what is presented to us through social media or advertising does not reflect reality. Rebecca makes it a point to include both the good and the bad. Being transparent shows others that though they are not perfect with their finances, by being consistent and careful about their choices, they are steadily building their financial foundation.
Lauren (net worth $36K) runs L Bee and the Money Tree. She in a millennial who lives in Georgia and runs a business as a content strategist. She stresses that since money is a lifelong process, no one can be perfect all the time. “So I’m of the mentality that it doesn’t matter what you do, but as long as your net worth is going up, you’re at least doing something right,” she said. “ After a youth spent making nearly every money mistake imaginable, my net worth symbolizes the steps I personally take in the right direction.”
Finance bloggers are not perfect. They’ve made mistakes just like everyone else. Lauren mentioned candidly that she feels like she’s behind. (But who doesn’t feel that way?)
Speaking about past mistakes, she said “I bought my first home three years ago at 26 and lost a lot of my savings and went into some credit card debt renovating the home, so I haven’t been able to contribute as much as I’d like. Now that I’m finally almost fully recovered from buying and renovating the home I’d like to play catchup on my retirement. My goal is to have $30K in my retirement accounts by the time I’m 30.”
Progress is closely related to hope. When we can look back and see how far we’ve come, we feel encouraged with more hope that we can continue on that same path forward.
Cait (net worth $50K) from Blonde on a Budget went from being maxed out with almost $30K of debt 4 years ago to a positive net worth of $50K running her own business writing, editing, & blogging. Speaking about her progress, she said “It’s just the beginning of what I hope my financial future will hold.”
Though she’s still “so far down on the totem pole on our list of Rockstar bloggers,” as she put it, she says that now having a solid financial base and knowing how much money she needs to earn is what enables her to live a happy and fulfilled life.
Mark at Bare Budget Guy (net worth $190K. Yes, I interviewed myself) finds saving and increasing his net worth to be incredibly motivating. He’s a small town CPA who works in finance while his wife mostly stays home and homeschools their 3 young kids.
“It can be tough seeing others around you whose net worth values seem to be skyrocketing while you are moving forward much slower,” I said. “There are some things that are more important to us than growing our net worth, but I feel very energized when we can still manage to grow it steadily (though slowly) despite having higher priorities.”
Brian from Debt Discipline (net worth $350K) uses net worth as a big picture way to make sure he’s on track with his money. He said that net worth “gets you out of the day to day thinking and lets you take a look at it from a 10,000 foot view.” Though in the 60+ net worth percentile of bloggers on the list, when asked about whether or not he considers himself rich, he answered in the context of his family.
“I do. I have a great family and friends, including my wife and three children. I have a plan for my money and I’m teaching my children more about money than I ever learned at their age. I don’t need a bunch of zero’s at the end of my bank account to feel rich.”
J at Budgets Are Sexy (net worth $500K) is the brains behind the Ultimate List of Blogger Net Worth. He decided to compile and track blogger net worth updates because of the sheer inspirational power that they embody.
He said “the part that inspires me the most is when bloggers share their net worths. Call me a voyeur, but there’s something so captivating about watching people’s money grow (and decline) as the months tick by. It’s just as inspiring to watch them go UP, as it is when they go down – if only to show these bloggers are just as human as the rest of us.”
For Steve from Think Save Retire (net worth $700K), net worth symbolizes his ability to control his life from start to finish. He is a consultant for a database manufacturer whose true passion lies in photography and travel. “The greater my net worth,” he said, “the greater the ability to live my life exactly on my terms, free from soul-crushing full time jobs and the constraints they put on an otherwise productive and fulfilling life.”
In my experience rubbing shoulders with fellow finance bloggers, very few are concerned with keeping up appearances or being “rich.” Steve is no exception. He continued, “Whether or not I’m truly rich doesn’t concern me much. Am I free? That’s a question I’m much more interested in answering ‘YES’ to.”
Which brings us to the next point: freedom.
Mr. 1500 (net worth $1.3M) is a software developer by day who lives with his wife and 2 young kids in Colorado. He started 1500 Days to document his journey to financial independence. For him, that meant achieving a net worth of at least $1 million which he went on to hit, and then blogged about how he did it here on Rockstar Finance.
That is the number that signified his ability to “pursue life without the constraint of trading time for money.”
Here’s what that looks like for him:
“Each day will be like a Saturday, but amplified. I’ll be able to spend 4 hours on a bike ride instead of 45 minutes after work. I’ll be able to read for hours every day instead of the current 30 minutes before bed. I’ll write code, but for my own projects that really interest me. Decoupling your life from money will set you free.”
It’s more than just wealth.
There you have it. Net worth is about more than just the accumulation of wealth. It’s about accomplishing your goals, whatever they might be.
What does your net worth symbolize to you?
About the author: Mark is a CPA who works in finance at a global manufacturing company. When he’s not recovering from skateboarding injuries, he spends his time chasing around his 3 (soon to be 4) crazy kids and trying to get people to share their money details at BareBudgetGuy.com.