“I’M NOT BROKE!”
“I still have a credit card app on my phone, so I’m not broke!”
Our online society has many tools to deal with finance that were not available last generation. Yet, the current generation is so financially screwed they don’t know where their next i-Phone is coming from.
A few generations ago, caught in debt, some would look at their checkbook (this generation doesn’t even have a physical checkbook or checks) and say, “I can’t be broke, I still have checks left.”
What is your NET WORTH? Few know theirs. It is NOT your bank balance. Net worth is all your actual assets (A), like cash, current value of your car and house, savings, IRAs, rare baseball cards, etc. MINUS your debts (B), like mortgage balance, credit cards, student loans, auto loans, etc. A-B=Net Worth. If you own a business, have a partnership, or rental houses, there may be more figuring to do. The basic concept is not a difficult one.
More than a quarter of American adults have never figured out their net worth. Less than a third do it annually. Early on, for us, it was a negative number. When we had our first wills drawn (to protect our children) it was around $50,000. Now, it is much more pleasing. There are always unknowables.
WHY? What is the importance of knowing where you stand?
Simply this, then you know whether what they are telling you in the news is accurate. I have heard several say, “It is so hard to go for groceries.” See? That is NOT how you determine how well you are doing! That is the OUTSIDE telling the INSIDE of the house how hot it is; yet the AC thermostat says that you are comfortable. Your net worth is your AC thermostat when the store tells you it is “too hot.”
A strange thing happened to our net worth recently. Even with OUTSIDE financial realities like food and gas prices increases we were able to put a grand a month INTO my wife’s savings accounts. When I last checked our net worth it was higher (retired on a fixed income). Our IRAs are worth more, the value of the house has grown, (the value of the car has dropped), and our bank balances keep improving. This in spite of the “news” telling us that “the economy is getting tougher.” The truth is INSIDE!
This is not a matter of OUTSIDE forces, but of INSIDE reality. You track your net worth to see the truth about your financial life. Don’t believe those OUTSIDERS, because many of them have a political agenda. Their agenda isn’t benefiting you.
There are things which CAN help build your net worth, and you should take advantage of those:
First, fund an account for an emergency. If you have no “bounce” you will drown any time you need a car repair. It doesn’t take much to protect yourself from emergencies, but it has to be a decision.
Second, pay off at least one debt. One daughter is still paying on student loans. She HAD three, she paid off one. The result is an extra $72 in her bank account every month. She is using that extra to pay down the principal of a second loan faster.
Third, save up for purchases. I needed a new recliner (for naps). Good ones aren’t cheap. I waited several months before pulling the trigger. It didn’t go on a credit card payment bonanza (for the salesman’s sake). It was paid in full at delivery. (I also chose a model that was 20% off.). In fact, we keep a zero credit card balance because it is foolish to pay 22% interest on that McBurger and fries that I gulped down 4 months ago.
If you do these 3 things you’ll suddenly be in a position to watch your net worth grow. But there is so much more you can do …
First, don’t waste those financial bonuses. When you get your tax return, or overtime, or $5 from Grandma … don’t waste those on temporary stuff, vacations, or nifty fireworks. That money should go into your ROTH IRA.
Second, find a side income. Grow a garden and sell tomatoes. One family raised a large patch of blueberries on their 3 acres. U-pick. That money was their retirement money. They worked a little here, a little there … then had to service the side job for about one month in mid-summer.
Third, don’t buy into “snazzy.” You probably don’t need that $85,000 truck. A $50,000 truck gets the same gas mileage, and will have the same service history. You don’t have to go “cheap” to save a bundle of cash. “Snazzy” won’t move you toward your goals, either. Foolish purchases, like 17 extra throw pillows, are not helpful.
Fourth, rent is a net worth killer. There is no shame in renting (I have). But you won’t see your net worth take off until you buy a house. That is because, although it costs a ton to get into your first house and you don’t save money on housing in the early years, soon your housing costs will start declining. Rent will always go UP, but the cost to owning a home will eventually cost far less. (How that works: Rent now is $1100/month. Rent in 10 years will be $1700/month. Mortgage and insurance costs now is $1250/month. Mortgage and insurance in 10 years will be $1375 a month. And after 30 years you won’t have a mortgage payment anymore. You will retire mortgage and rent-free.)
WHAT’S THE GOAL?
Seek to improve your net worth year over year. We went from a negative worth, to positive about the time we had kids. Then it started growing like a weed. We’ve never been “rich,” but we keep improving. You can, too.
You don’t need millions to retire well. You just need several streams of income which keep you from siphoning everything from retirement savings. A part-time job, an annuity, Social Security, and not being stupid with money (don’t buy chocolate covered strawberries, for example … $21 for 6 strawberries is ignorant spending.)
For all the hype about the low teachers’ salaries, teachers represent the largest group of new millionaires. They don’t spend like drunken sailors and they buy houses. That’s the whole story.
Copyright 2026 Donald Whelpley
[PLEASE NOTE that Don is always open to discussing the thoughts and opinions he shares here and welcomes comments as shared in the comment section. He doesn’t use other social media platforms and won’t see whatever you’d like to share with him if you post it elsewhere.
ALSO, Don is always open to offer his thoughts on various topics. If you have a specific request, you can let him know in a comment; he reads – and replies to – them all. ~ Sherry]
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