Blog: Your Net Worth

Financial service institutions such as banks sometimes ask, “What is your net worth?” The answer is usually very simple: everything that we own (cash, investments, real estate and property, etc.) minus what we owe (usually loans or a mortgage). Essentially, this is the same as how a business calculates net assets.

For some businesses, however, the balance sheet is not the most accurate way to determine net assets. If a business has significant intangible assets (such as copyrights, patents, or trademarks), the balance sheet can significantly understate net assets.

I think that most people have many intangible assets that we do not include in our “net worth.” Even though banks may not care about our intangible assets, we certainly should include them in our net worth. How much is a loving spouse worth? How much are children worth? How much are good friends worth? How much is a fulfilling career worth? How much is volunteering at a food pantry worth? While all of these things are impossible to put into monetary terms, they are invaluable to us and bring so much to our lives.

So, even though your intangible assets won’t convince a bank to give you a loan or a mortgage, the next time that someone asks you for your net worth, keep in mind that your most valuable assets are not your tangible assets. We should always remember that we have so much more than is reflected in our “net worth.”

What are your most important and treasured intangible assets?