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Net Worth is like that magical mirror on the wall at which one can ponder, “mirror mirror on the wall can I depend on my savings at all?”. And just like that it will dress you up to look like a Monarch or a miserable Vagabond. There is no better way to illustrate how critical it is in the financial world to know one’s Net Worth.

Sooner you wakes up to this harsh reality of where exactly you stand in financial life, the better. Your Net Worth can hit you like a brick the first time you calculate it and break your heart or make you jump in joy. Trust me it can be an emotional awakening !

Don’t worry if the numbers you see are not very encouraging ( if you have another 10+ years of work life in front of you). Picking up this book to explore the possibilities of investment is in itself a giant leap towards a positive direction.

“In order to build long lasting wealth, one has to cross ground ZERO !”

101-Baba

Q: What on earth is a  Ground ZERO ? A: Ground ZERO Line is where it all begins when you start earning. Everything above Ground ZERO is what we plan to build (say at the age of 21+ for most of us). Unfortunately we slowly slip below Ground ZERO because of the debt we accumulate over the years.

Why we get into the whirlpool of debt is a separate topic of discussion.

The Ground Zero is the foundation for building your savings tree. Sow the seed today and few decades later, you get to benefit the fresh air, shade and sleep under it in peace.  The Saving’s tree will continue to provide you with whatever is needed with the rest of your retirement years. The main goal going forward should be to reach the ZERO Line, Only then can we think about building the funds needed for retirement.

To know your current Net Worth please make sure that all investments and debt are available readily and accurate.

 Following are NOT to be considered as part of your asset

• Apartment of any kind
• Vehicles , even if it’s from a top end luxury brand. If it’s studded with diamonds then probably we can reconsider.
• Shares that are yet to materialize, unless you sell them it’s like counting chickens before the eggs hatch.
• Ancestral property . You never know who it will be assigned to unless the will is read.
• Gold which is in the form of jewellery . The making charges and unavailability of buyers makes it an unhealthy asset. The rate at which gold appreciates as an asset is slow. On the other hand 24carat gold coins or bars are a definite yes !
•  Anything that is not in the form of invested money should not be part of this tree !

Why should I not consider apartment as an asset ?
Apartments only depreciate over time and land is mostly not owned by you. Visit 20 year old apartments in Mumbai to get a feel of what happens to the swimming pools and filthy politics that happen in the name of governing society. There are fights to even change a broken bulb 😉

Net Worth is a key differentiating factor on how quickly we need to hit Zero ( in case it’s negative ) and how much one needs to achieve Financial Independence !

Financial Independence does not mean one stops working , it is in fact an indicator on how comfortably one is placed and not any longer part of the rat race. Present day work culture involves sitting  in a 2×2 box called the cubicle and slogging it out from 9-5pm. Comparing our 9-5 jobs to a guinea pig running on a wheel trying to get at something that is beyond its reach. The guinea pig could get off the wheel and pace around leisurely as and when it seems fit, but it won’t due to its inability to get out of the cage. Taking this analogy to our work lives means working on something we like and not be answerable to the mean boss or forced to work every single day to meet ends or plan for a vacation months in advance because of the lack of leaves and funds.

Did you know that Guinea pigs had weak spines and can be fatal at times running inside a wheel !

I am not worried , i will inherit from my well off parents ?!!

If your idea is to be spendthrift and not worry about your savings , think again. Figure 10: The graph pulled out of global wealth report of 2019 shows that most inherit the ancestral wealth at the young age of 61+ :). And if the inheritance involves properties, you should have enough money to at least maintain them! The millennia on the other hand have to wait longer as advancement in medical science is making sure the oldies live longer :P. Add to the cost of going to court for disputed land and hefty lawyer fees.

In our next post we will see how to calculate Net Worth !

Read Next: Increasing Net Worth

Please read the disclaimer carefully before making any investment based on the articles published on this Blog !!