What is your Net Worth?

Steve Cummings

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When I start a financial class one thing I want people to think about is how much they are worth. What is their Net Worth? Unsurprisingly, many people really do not know their Net worth. It gets them to think. Let’s think about our Net Worth.

Keeping track of Net Worth is one thing that can help you accomplish many financial goals.

You can track your regular Net Worth and even track your liquid net worth to see how much you need to hit early retirement. 

Are you in debt? Do you have a negative Net Worth or a positive Net Worth? Does looking at your ever disappearing bank account stress you out? If you answered yes to the last question it is time to change how you look at things.

My Net Worth:

I did not start really tracking my Net Worth until April of 2020. The thought of it seemed quite daunting.

My tool of choice was Personal Capital. It is a great tool to see how much is in your accounts, and it calculates your Net Worth. 

Since I am an expat, it is quite difficult to track the money that is in my foreign bank account.

So I did it the old fashion way, I went to a finance blog that had a cool excel sheet like Budgets are Sexy, downloaded it, modified it, and now I use it for my purposes. If you are interested in it, here is a link to that post with links for that excel sheet. 

Using this excel sheet has helped with tracking the true Net Worth. I still enjoy Personal Capital, but sometimes I just need some better numbers like seeing how I have decreased or increased from month to month.

How to come up with a Net Worth:

Coming up with your Net Worth number is not that hard. Basically, you will take your assets minus your liabilities, and boom a Net Worth Number.

This number will be the base for you to start thinking about where you need to go. 

Sometimes this number may look bad as in it is in the negative. Do not fret, life is long and over time that number will become more positive and larger.


Assets are the things that are worth money. If you own a house that would be considered an asset.

Investments, cash in a bank account, real estate and anything else that produces income would be considered an asset. Since I do not own a house, I count the cash and investments that I own into my asset column.


Liabilities are the items that cost money. A mortgage will cost you money every month. It is debt that you own.

Student loans is a type of debt that will put a negative damper on your finances. Even credit card debt will be a negative. 

I use credit cards to travel with, but since Mrs. FE and myself have not traveled recently we have not incurred too many transactions. That is a great thing, but I do love points and traveling.

With credit cards we always pay them off at the end of the month, and do not accrue any unwanted interest.

Assets-liabilities=Net Worth #

First, Let's start with your number

Let's now take your assets minus the liabilities and create that Net Worth number. 

This is your starting point. The Net Worth number will help guide you through your journey. I have posted my Net Worth so I too can track my financial journey.

Compared to other people

Let’s now take a look at how your worth is compared to others.

In the book, the Millionaire Next door, Thomas J. Stanely talks about accumulators of wealth.

He gave some formulas to help us figure out how we are doing. These formulas are not true to exactly how you are doing financially, but it gives a number to help you figure out some goals to be more efficient. 

There are three categories. There is the Under Accumulator of Wealth(UAW), Average Accumulator or Wealth(AAW), and the Prodigious Accumulator of Wealth(PAW).

Each one is different, and it categorizes people in areas to show how people spend and budget their money. 

You will need that Net Worth number to help you with this.


What I want you to do is to first take your annual income and multiply it by your age. Next divide that number by 10. This is the AAW number.

(Annual Income x age)/ 10= AAW


To find the UAW, you take the AAW number and divide it in half.



To find the PAW number you take the AAW number and multiply it by 2.

AAW# x 2

Use the Numbers to make goals.

Take these numbers and figure out where you are around. Then make some goals to achieve.

The first time I saw this I knew that I was an under accumulator of wealth. It took me 30 years of my life to truly figure out investing. Now, I am playing catch up. It is truly intriguing looking at these numbers and seeing where you can be.

I take a look at these numbers and my Net Worth and try to figure out a good goal to set in order to achieve. Who knows, maybe you want to be a millionaire. We all have different goals in mind, but once you have a base you can achieve your financial goals. 

What is your Net Worth? Have you ever thought about figuring it out? 

” Spend less than you make, stay out of debt, and invest the rest”

7 thoughts on “What is your Net Worth?”

  1. Hi Steve, thanks for the post. I like the concepts of UAW, AAW and PAW, never came across it before. Those acronyms need some work though ;).

    Couple of questions about the calculations:
    1. Would you take gross or net income to calculate the AAW? Using gross income, I’m just about beating AAW, but with net income, I’m actually near PAW territory.

    2. Is it “fair” to use current income? As in… Is it somehow captured in the calculations that current income is likely far higher than income 5 or 10 years ago? My income 10 years ago was … nearly nothing as a student. 5 years ago it was just about half of what I make now, in gross terms. I guess since age is factored in, this may be somehow accounted for, but I was just curious how 🙂

    Thanks a lot! Always love a post that introduces me to new concepts.

    • Hey LadyFIRE,

      Great questions indeed. I am glad that this post has introduced you to new concepts.

      These acronyms do need some work. I highly agree with you on this. They are not perfect, but it is just a good place to start.

      Thomas J. Stanley, who wrote The Millionaire Next Door, came up with these acronyms. From my understanding, it is your net income. With these these acronyms, Thomas J. Stanley is trying to point out if we are the type of person that is all about consuming our income, or the person that does well at saving.

      Of course, over the years these have been criticized because sometimes as we are younger we are not making as much, and that can really affect our Net Worth as we get older. It really doesn’t take an account on compounding interest as well. Since as we age, our wealth should be compounding and therefore will rise much higher.

      So your point #2 is correct in not really showing how the higher incomes later in age affect the AAW. I hope this answers your question.

      • Thanks for the reply Steve! I’ll see if I can get my hands on the book to read more about it 🙂

        And thanks for addressing the age question too. I ran my number with various ages (assuming either the same or a slightly increasing wage over time), and it did not really line up with my intuition. But the concept definitely got me thinking!

        • I watched some youtube videos on this as well. The one YouTube guy talked about that there were definitely improvements to be made, but it really gets you to think.

          I personally took a look at this, and realized for the longest time I was an UAW. Since I have been researching, changing, and working on my own finances, I have been saving close to 60% and investing it. This has put me into the category of AAW. As time goes on, my numbers get closer to PAW.

          It is a reason I also like to track my net worth. I want to be accountable to my goals, and work on increasing and reaching FI.

          Thank you for reading. I am glad I could provide some useful information to you.


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