Your Net Worth: What It Is and What It Isn't

Around here, we tend to talk more about cash flow — earning, saving, and spending — and less about net worth. Why? Because net worth is the sum of what’s happened in the past — how much you’ve previously accumulated — while cash flow drives where you’re headed right now. Are you saving more than you’re spending? Are you throwing money at high-interest debt payments? There’s only so much you can do right this second to increase your net worth, but there’s plenty you can do to improve saving and spending habits and start trending in the right direction.

That being said, net worth awareness is one of the building blocks of financial health. There’s quite a bit of fixation on net worth out there, so we’ll take some time to talk about what it is and what it isn’t, and then we’ll go over how to approach your own net worth.

Couples Tackling Money with Intentionality

Let’s kick off the summer with an uplifting quiz question: What area of disagreement between spouses is the best predictor of divorce?  Sex, right? Nope. Or perhaps in-laws? Sorry, no. The answer is disagreements over finances. Money implicates our deepest values, hopes, and fears.  It serves as a proxy for status and success, and it often drives our sense of self-worth.  It’s no surprise that disagreements over money have profound implications for our relationships. For couples, the cornerstone of financial health is not how much you make, how much you spend, or how much you’ve saved — it’s how you communicate about and relate to money as a team.  And in this article we’ll be walking through the essentials of healthy communication about money.

How to Make Less Money

One of my favorite goals to help clients work toward is how to make less money. Wait, less money?

That’s right.  After all, a job that pays less is often an avenue to more time with family and friends, regaining control over your email-filled nights, weekends, and vacations, and doing more fulfilling work.  Who wouldn’t want that? Making less can allow a major life shift that brings your day-to-day into better alignment with your values.

But most people can’t afford to take a substantial pay cut, at least not on their current budget.  There’s a mortgage (or rent) to pay, student loans to cover, travel already planned, activities for kids — there’s no extra margin. Fortunately, with some intentionality and clear-eyed decision-making, it can be done.

Conversations with Aging Parents

As your parents get older, they’ll inevitably begin to face a variety of issues that come with the golden years: planning for retirement, estate planning, living arrangements, long-term care, when to give up driving, and others.  Often it falls to one or more adult children to step in and help. Below are the steps to take to broach these topics with your parents as they begin to face these issues.

Everything You Always Wanted to Know about Investing (But Were Afraid to Ask)

Investing is kind of like sex: everyone’s doing it, but no one’s talking about the basics.  Instead, it’s the sensational aspects that get all the airplay. The result is an essential topic that’s often misunderstood and over-sensationalized. Here we’ll look beyond the facade to tackle the nitty-gritty essentials of investing and provide some practical perspective on key questions.

Setting and Tracking Financial Goals

You’ve probably heard that writing down your goals makes it more likely you’ll achieve them. A recent study even concluded that writing down your goals on a regular basis ups the success rate by 42% — sounds overly precise, but we’ll take the sentiment. When it comes to financial goals, though, we can do more than just write them down.  Because they ultimately boil down to hard numbers, we can track our financial goals and measure our progress.  As Peter Drucker, dubbed the “founder of modern management,” observed: "If you can't measure it, you can't improve it."