Net Worth: How Should It Be Defined?

Craig is a Christian missionary, writer, and speaker. Ten years of ministry experience has provided valuable insight for helping Christians deal with their personal finances from a Biblical perspective. His blog www.moneyhelpforchristians.com provides daily personal finance advice from a Christian perspective. You can subscribe by RSS feed here.

It’s a term we have heard of often – net worth. The calculation is relatively simple – add up what you own and subtract what you owe. Voila! You have your net worth. If that calculation seems complicated, most basic budgeting programs show your net worth every time you open your budgeting software.

The goal of many individuals is to increase their net worth over a lifetime.  There is, however, a common misunderstanding regarding net worth. Many think net worth is visible to the neighbor.

Here is our misinformed formula:

The bigger the house + the newer the cars + the larger the salary = a larger net worth.

Instead the following is typically more accurate:

The bigger the house + the newer the cars + the larger the salary = a greater burden of debt.

Here is the actual formula for increasing your net worth:

Salary – Expenses (bills, shopping, insurance, payments …) = $1 < (a dollar or more)

In other words net worth is built only by having something left over at the end of every month.

One cannot increase their net worth by:

• Earning more money
• Buying another vacation home
• Purchasing a shiny new vehicle

Net worth is increased by doing one thing – living on less than you make. If you are not saving anything today, you are not increasing your net worth.

But, even this is only a small, small part of what it means to build your net worth. Look at the term more closely.

net = sum, complete, total, entire

worth = value, importance, significance, merit, meaning.

Net worth could be said in the following ways: the sum of your value, your entire significance, your complete meaning.  We fool ourselves if we think our worth, net worth, can be calculated with a pen, paper, or calculator. We prepare ourselves for a lifetime of disappointment if we think our worth is determined by what we own.  Our worth is found in our relationship to Jesus Christ.

Our most significant assets are husbands, wives, children, church, and friends.  Our most important investments are those with eternal implications.  Our gains truly increase only when we give.

“What good is it for a man to gain the whole world, yet forfeit his soul?” (Mark 8:36, NIV)

Your worth can never be calculated by a number on a bank statement. Your value can never be attained by adding some numbers. Your significance is not found in what you have, but to whom you belong.

So get out there and build your net worth.   But, be sure you define net worth by something broader than money.