One of the first exercises I do with my clients as part of our money coaching sessions is to calculate their current net worth (the total of what they own minus the total of what they owe). We then use this figure as our benchmark to measure their financial progress. By recalculating that number a year later, we know how their net worth changed year over year.
I believe it is an important exercise to complete since it gives us a specific numerical figure associated with how well they’re progressing financially.
HOWEVER, one big word of caution that I always like to emphasize is: Your Net Worth should not be even remotely correlated to your Self-Worth!
Unfortunately too many people living in materialistic, consumption-focused societies tend to correlate these 2 concepts… They think that the higher your net worth, the stronger your self-worth. What a distorted way of evaluating oneself!
The dangers of correlating your net worth with your self-worth are twofold: Assuming your net worth goes up, your ego might get a boost, you might start feeling more important, more powerful, perhaps more demanding, or even feeling like you deserve to be more respected! But what if you are going through financial hardship and your net worth goes down? You might start feeling like a failure, somewhat worthless, poor, inferior, unlucky,…
I believe that self-worth should be based on factors such as self-love, feeling like you are living a fulfilling and passionate life with a meaningful purpose, making a difference in the world, being the best human being you can possibly be and answering your soul’s calling. So if you remove money and material “stuff” from your definition of self-worth, you become immune to the fluctuations in your net worth.
As one of my favorite quotes goes: “Starve the ego, feed the soul” …. And one way to starve the ego is by making it completely independent from your assets and liabilities!
