“Be sure you know the condition of your flocks, give careful attention to your herds.” – Proverbs 27:23
I’m going to go way out on a limb and guess that you may not have any sheep or cattle to look after. But you probably do have investments, a home, a car, and other stuff. All are modern day equivalents of the flocks and herds of biblical times.
While the Bible teaches us not to obsess over our stuff or to make it the focus of our life, it does instruct us to pay attention to our assets and keep tabs on their condition.
Many of us will soon get year-end statements from our banks, brokerage houses, 529 plans, and such. It’s a good idea to tally it all up at the end of each year by completing a net worth statement. You can get an estimate of your home’s value using sites like Zillow or Cyberhomes, and the value of your vehicles through Kelley Blue Book.
What the Net Worth Statement Misses
But a net worth statement is an incomplete measure of wealth. That’s why I introduced the idea of experiential and emotional net worth statements in the “Money, Purpose, Joy Personal Workbook.”
Experiential net worth may include classes you took that added to your knowledge or trips you took that added to your memory bank. This past summer we rented a house in Michigan for a week with extended family. I can still see our kids running on the beach with joyful abandon, and those memories will enrich my life for years to come. By strict accounting rules, the vacation was an expense. Experientially, it was an invaluable investment.
Experiential net worth also includes our charitable contributions. From a pure accounting perspective, such contributions look like expenses. However, depending on where you make such contributions, they can constitute investments of truly eternal value. And the joy we derive from generosity deserves some acknowledgment as well.
There isn’t one absolutely right way to fill out an experiential net worth statement. You could list how much you spent on vacations, but the important thing is to use the exercise as a reminder of the experience and an acknowledgement that it added value to your life.
For charitable contributions, you could list the actual amounts given, but also indicate what percentage of your income you gave away. There are two reasons for this. First, the Bible teaches us to base our giving on a percentage of income (see Deuteronomy 16:17 and 1 Corinthians 16:2). Second, if your income went down this past year but the percentage that you gave away remained the same, that’s reason to celebrate. In essence, you were just as generous as when your income was higher.
Emotional net worth has to do with how we’re feeling about our finances—our financial confidence, contentment, stress, or joy. These are subjective measures, to be sure, but it’s helpful to score yourself on such factors nonetheless.
I have very simple forms for each type of net worth available for free download on my web site.
Other Measures to Consider
Some additional ways to think of net worth include:
Relational net worth. How did your use of money this year impact your most valued relationships? The new assignment you accepted at work may have increased your financial net worth, but did it cause you to be away from your family more often?
Physical net worth. Did you make any investments in your health this year? The purchase of a new bike may look like an expense, but if it helped you lose weight or lower your cholesterol, it was a great investment.
What other measures can you think of that would help you assess your true success in using money over the past year?
Matt–Great article. As someone of retirement age who has had what many would say is “success in life”, I wholeheartedly agree with your premise. It is not the financial statement that makes us happy. Faith in God, family and friends are what truly make us happy. I wish everyone could learn this lesson when they are young and starting out. I would do a lot of things differently the second time around. But praise God, I got one thing right! I accepted Jesus Christ as my Savior!
Mitch – I’m very sorry to hear about your parents. Getting everyone together at a time like this sure sounds like it has the makings of an amazingly memorable vacation. I hope you make the investment.
We were just talking about the possibility of all siblings and family getting together in one place for a family vacation in honor of our parents deaths over the last two weeks. All I could think of what an expense it was going to be instead of looking at it as a memory that no one can take away. Thanks for your article.
Mitch Maloney