Your Guide to Working Out Your Net Worth

Your net worth is the only true measurement when it comes to money. Oooof! That's a big statement. 

What's funny is our society has a strange obsession with income and how much you make - whether that's in your career or in your business. It seems to be the barometer we use to measure success.

Here's the thing... regardless of what you EARN, if you're not keeping any of that income (and then investing that money to make more money and grow your net wealth) then your income level itself is a moot point.

The KEY to building your net worth comes from keeping a portion of what you earn (aka paying yourself first) and investing it to make money in your sleep. 

This ep talks about calculating your net worth, your network, and your self worth...and why they're all important and ALL linked. 

xo

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To increase your net worth, start investing yesterday. Seriously, invent a time machine.

No? Ok, then come and join Investing Bootcamp and start investing today.

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If you want to keep on, earn more and make more money you're in the right place. I've spent over 10 years learning from the most brilliant minds in money, wealth, and investing to take myself from 20 K in debt to a seven figure investment portfolio. Join in. As I share the secrets towards more growth, money investing and ultimately freedom. My name is Simone Masa, Huggins, and welcome to ms. Wealthy's kiss my money podcast.

Your net worth is the only true measurement of money that matters. Ooh, that's a big statement. This episode is talking about your net worth. It's also called your net wealth. And so I'm going to use those two phrases interchangeably, and I'm going to talk about what it means, how you calculate it and why it matters and what determines our net worth. Now, first up, if you don't know what your net worth means, it basically means you add up all of your assets, all of the things you own, and then you subtract all of the things that you owe, meaning your liabilities. So it's your own minus your Oh, so it could be things like if you own a house, you might have say, say it's a half a million dollar house, a $500,000 house, but you have a $400,000 loan on it. Your net worth is about $100,000.

Okay. What are some other examples? If you have no real assets and I'm not talking about like, you know, the clothes, for example, in your wardrobe, or like the day to day stuff are not assets. So I'm talking about things that actually something that I though are an investment and they make you money or things like your home that you can sell that has equity in it. So if you have just say clothes and jewelry and like, like basic stuff, but no actual assets, then we can kind of estimate that it's a L it's a roundabout zero. Let's just say for the sake, it's zero. Okay. But what if you have then a credit card or a personal loan, or what if you have student loans say you have $20,000 of student loans, but you have zero in assets. And that means you actually have eight negative net worth.

And for some people hearing that for the first time, it could be really scary, but you need to understand it's okay. You just need to first start with awareness, right? Awareness of where you are. So you can start actually measuring it. Now, some of the questions that come up sometimes is okay, but what about my car? So I say, you have a car that's worth, I don't know, $20,000, but you have a loan on it of, you know, maybe 10,000. Some people would say, well, therefore I have my net worth is actually, and I don't have any other debts. Whatever my net worth is actually then $10,000. Here's the thing with a car. If you were to sell that today, you would pay fees on that. Maybe you wouldn't actually get that, uh, estimated amount. And the other problem is if you sell the car and then I left with nothing, meaning, uh, if you actually need a car to get around, then you're actually, you know, worse off position.

Even though you have those funds, if you then kind of stuck because you can't get around with public transport. For example, the car is one that I don't include as an actual asset because they are actually considered a liability liability. Literally just means that you pay money on it and it depreciates in value. So it's costing you money to run and you're losing money over the long term. This is also as a side note, a big reason why I'm so against car loans, because you're paying interest on something that goes down in value. So your net worth is calculated by what you own minus what you owe. Other things you own are things like stocks. For example, say you have Apple and maybe you've inherited that. Or you bought that yourself and maybe it's worth like $4,000 today. Then the question becomes, can my net worth change over time?

Obviously? Yes, because the whole goal is to increase your net worth over time by continuously investing in assets. That's how you grow your net worth. Then the other one is, can it go down? Yes. So it can definitely go down, particularly with investments that fluctuate, those ones, uh, housing, housing fluctuates, and the stock market fluctuates. Other things like gold fluctuate. The only other real thing that you would say doesn't go down, uh, is cash. However, with inflation, having your cash sitting in a bank account, it actually does go down over time. So I am also, if you've probably listened to any of my podcast apps or seen any of my content, you know, I am a huge advocate of investing your money, not to keeping it sitting in a savings account, gathering dust, because most of the time you probably getting one to 2% maybe.

And yet the rate of inflation is about two to 2.5% on average. So if you have your money sitting in a savings account, it's actually going backwards. So assets can be cash that you have on hand. Um, you know, literally like things like stocks and housing, and if you own any commodities or anything like that, they are, you add all of those things that you own minus all of the things that you owe. So you minus your credit card, debt, your debt to family, on friends, your student loans, anything that you owe that you have, you still have to like pay out money to that equals your net worth. Now the other question I get massively around this is what is the average? What, like, where do I sit when it comes to, you know, the average net worth for like someone my age, I don't go into this because for, for starters, the comparison game is not one where you end up winning.

Because if you find yourself that you are below the average net worth for your age, for example, that's going to leave you feeling pretty deflated. And yet if you're above the average, you might then go, well, you know what? I'm fine. I can go and get, take on some more debt and I'll get complacent. Here's the thing about the average 80% of the Western world live paycheck to paycheck. So this whole point of me starting as wealthy the podcast, my clients, the members of investing bootcamp, the whole point of this is to make sure you are not the average. I do not want you to be living paycheck to paycheck. That is not the idea of building wealth. That is not why I'm here. And then it's not why you're here listening to this podcast right now. So I do not please do not look up averages.

Here's the other thing, what you should be benchmarking if you actually want to and have to in like, need an answer of certainty around averages, you should be benchmarking yourself on the 20% that don't live paycheck to paycheck. The 10% that know truly build wealth effectively over time. And if you're looking at those numbers, then we're talking in the hundreds of thousands of dollars, ideally that you're at, if you're in your thirties or forties, that you should have in terms of net worth, if you're comparing yourself to others. So like I said, I don't go into averages. The other thing averages don't take into account is the fact that if you're just starting on your financial journey, now you're a financial empowerment. Now getting financially fit. Now it doesn't take into effect into account. The fact that in the past, for example, maybe you haven't been so focused on finances or getting empowered financially.

And so now that you are, and you're shifting your mindset and you're shifting yourself worth, and you're shifting to things that are going to make you more money to make sure that you're keeping on wanting to make sure that you're investing more, to make sure that you increase your net worth. Then you're going to start to see a massive compound effect as a result of that now, rather than looking at what you've done in the past, because that's completely different because now you're on a different path. So that's also why I don't think that looking at averages is necessarily the best idea. My view is to make sure that you have the right system in place, the right money management system in place, so that you're keeping what you earn, keeping more of what you earn and then investing that so that you literally make money in your sleep so that your money makes money because that is how you build your net worth.

Now there's a couple of things that I want to talk about on this point, because I have both one-on-one clients and members of the investing bootcamp program and friends, and in my network that earn in the high fives that earn in this, in the kind of sixes, and then even in the seven figure range. So, you know, owning at least a hundred to 200 to 300,000 and then some that are earning in the millions per year. Now here is what it gets, where it gets interesting. So many people and such a huge part of our society measures success based on what they earn, meaning what is your salary? What do you bring in new business that is not the true measure when it comes to your net worth. And that is not the true measure when it comes to money. Because if you're earning multi six figures, you're pulling in a quarter of a mil a year, either in your business or as a, you know, in your career, how much of that are you actually keeping, if you're pulling in a quarter of a mil and you're spending a quarter of a mill or you're spending $300,000 every year, you are either at zero or going backwards.

So it doesn't what you actually earn, does not dictate your net worth. What dictates your net worth is how much you keep, how much of that you actually put aside, how much of that you actually pay yourself first, meaning what do you put aside to contribute to your investments, to buy assets, to grow your net worth the other two major things that I talk about? And you probably heard me talk about before that dictate your net worth is your self worth and your network. So they are two things that are not directly about how much you actually make either in your business or in your career, but here's the thing with your net worth. So if you know my story, you know, that I have previously been many years ago in $20,000 of debt. And I made that mean that I had no self worth, that I wasn't worthy, that I wasn't good enough, that I was really, I was a crappy person and I didn't deserve anything because I managed to get myself into this financial hole.

But actually I was looking at it backwards, what I came to realize years down the line. And when I started doing proper work on myself was I realized that because I had a low self worth that dictated my net worth my negative net worth. I had such a poor, terrible self worth that I genuinely didn't believe that I was worthy of being paid more. I didn't ask for raises. I didn't put myself out more. I didn't go for jobs. I wasn't confident in my ability. So it literally dictates your net worth. Here's the thing, when I first heard that as a concept, as an idea, I literally, I was so angry. Like I couldn't believe I was hearing that. I think at the time when I first heard the very first time I heard it, that your self worth dictates your net worth. I was just like, that is absolute crap.

I cannot believe that that's being put out into the world. You know? And I heard it from, from someone who at the time was my mentor. And I was, I just couldn't, I could not believe that that was being said, but it triggered me so much because it was such an issue for me now, as I've come to work on myself over the years and now understand how much of our mindset and now internal belief patterns and our thoughts and our feelings dictate what we create and dictate what we do and dictate what we believe we can actually achieve. I've actually realized that that is the absolute truth that your self worth dictates your net worth. The other thing that I talk about a lot is about your network. So if you are surrounding yourself with people who are broke, who have a really crappy money mindset who have really crappy self worth, who judge, uh, rich people or they judge money, or they talk negatively about it, those belief patterns, that language is going to rub off on you.

I'm sorry, but you can become a millionaire whilst you surround yourself with people who have $1 mindsets, you just, it's literally impossible. So a big pot of up leveling and increasing your net worth is increasing the level of your tribe, the level of your network, what are they doing with themselves when it comes to their money? What are they doing with themselves when it comes to the working on their mindset and creating wealth? Because it wasn't until I got serious about learning from and surrounding myself with those that were serious about it, that honestly got super, super, super clear about how to create more wealth and S like essentially squashed time to like compact time and maximize profit. That's when I started also taking a quantum leap, the first leap was actually getting the proper tools, the practical tools to keep more of what I earned.

Then I moved on to understanding how much my self worth dictated everything. And then I moved on to really understanding that that network is, has a massive part to play in our net worth life. And so now I am literally surrounded by multi millionaires, not billionaires yet, but definitely millionaires and multimillionaires. Now I'm also surrounded by, like I said, those that earn in the millions, but like I said, doesn't mean that they are keeping any, everything. I know people that are in the seven figures in the millions and yet have a negative net worth. Let me say that again. Cause that might be like mind blowing for you. I know people that are earning in the seven figures in the millions every year and have a negative net worth. Whew. Wow. Right. So this is why I need to be super clear with you. What you earn is not the biggest determining factor of how much net worth you create.

Now, if you've been listening for a while, you know that just this month we hit in a million dollars in, in our investment portfolio in assets. Now here's the thing I have not always been a six or multi six figure earner. I started creating wealth when I was a five figure earner. I had a career when I first started this journey. I had a career. I haven't always been a full time investor and trader and business owner. I started this when I was still earning in the five figures. Okay. So don't get caught up on thinking that, Hey, just be, I don't earn like quarter of a million dollars. I don't earn, I don't have a seven figure business. That is not what is going to get you there. So the other thing I want to talk about just briefly on that, if you are a business owner or an entrepreneur, you need to know that when, when, when the idea of like a seven figure earner comes up, always know that that doesn't mean that they are banking or profiting seven figures.

They might have spent half a mil or three quarters of a mil to get that seven figure. That's seven figures in revenue. Okay. So like I just wanted to leave. That comes up for some people not understanding that when that is quoted, it doesn't mean that that's actually, what is profit anyway, I'm getting slightly off tangent. So why is net worth important? Like I said, in the beginning, it is the only true thing that we can actually measure. So you can start tracking that now and over the years to come, continue to track it. Obviously the idea is to, for it to go up, because that is the number your net worth is the number that you can use as your benchmark to retire off. So when you hit that million or a couple of million, then you can go, okay, how much can I live off that?

Which is a whole nother conversation for another time, but essentially how much can you draw down over time, over the period of your, what you see is how long you'll live for before, you know, it gets to zero. Or if you want to leave a legacy, how much you want to leave for your children or your family. So that measurement, that net worth number is what is so important to start tracking and start looking at. Because that is what is the difference between understanding when you can actually retire when you can choose to work, because you want to not because you have to, that is the number that for you will dictate and determine when you've hit financial independence or financial freedom. And here's where it's interesting, that number is different for everyone. I know some millionaires that have retired pretty young in their forties because they wanted to, you know, there was, there was really nothing in terms of a fulfilling career or job or business that they felt that they wanted to do.

So they retired, but ha but I living a very, you know, like kind of average live, like they're not going on extravagant holidays. They own their house outright, but they essentially kind of just live a very quiet, calm life because obviously they're in their forties. So they've got another like 40 or so or 50 years to live on that few million. So they can't be spending like 200 or quarter a million dollars a year. So depending on what financial freedom looks like for you or what financial independence looks like for you, it's different for everyone because everyone has different measurements of what they see as a life they want to live. Do you want to live out in the country and grow your own vegetables and barely live off like barely need any money really? Or do you want to be traveling every year around the world and be staying in fancy hotels and you know, leaving a million dollars to your kids.

Those numbers can be very different for everyone and there's no right or wrong. It's just what's right for you. So net worth is such a big thing that I talk about. And I wanted to cover this off in this episode because it's come up a lot with my clients recently on kind of getting stuck and hung up on how much they're earning, but not actually focusing on their net worth and that their wealth, that they're actually creating how much you're earning versus the wealth that you're creating. So what I want you to do now is going work out your net worth. Remember, it's what you own minus what you owe and then check out what you're actually keeping, what you're actually keeping of what you earn so that you can create assets that make you more money without you having to do anything. That's the end goal, making money in your sleep.

Yes. That's why you're here. That's why I'm here. All right. That's it for today. If you want to come and work with me one on one to actually start changing this net worth number. This is what I do for my one on one clients. I tackle all things net worth to grow that at exponential speed and cut the success time down. So it means that we work on things like your self worth and what dictates that. What makes that out for you and actual strategies to create more net worth with practical tools to get you there too. You know where to find me DMA, find me on Facebook. Otherwise I will see you next week in another app.