Net Worth and Why I’m Not Focusing On Mine Right Now

What is a Net worth?

A net worth is how much a person is worth in monetary terms after taking away everything they still owe money for. It’s a snapshot of a person’s financial position in that moment of time. The value of assets can go up and down day to day, sometimes minute to minute whereas liabilities are designed to reduce over time (it’s not always the case) but these factors can alter your net worth day to day.

The calculation to work out your net worth is:

Assets – Liabilities = Net worth

What’s an Asset?

An asset is something owned by a person or a company that has an economic value, basically its worth some money. It could be sold for a profit either now or in the future.

Assets are; cash in bank accounts, savings, retirement savings (pensions), bonds, vehicles, plant and machinery, shares, property, dividends, artwork and jewellery.

What are Liabilities?

A liability is something that a person or a company owes money for. For example, a loan taken to buy a car would be classed as a liability. Credit cards, personal loans, pay day loans, student loans (although in the UK, these are generally not included), overdrafts and mortgages are all examples of liabilities.

You can include whatever assets and liabilities you like, but the most common ones I have already listed.

How to work out your Net Worth

I make two separate columns, one for assets and one for liabilities and list each one. Add each column up and then take the liabilities away from the assets. This will leave you with your own personal net worth.

A positive (+) net worth is one that is in credit, so you have more assets than liabilities (the position we all want to be in!). A negative (-) net worth shows that you have more liabilities than assets.

Most people that have a mortgage would have a negative net worth. I always thought it was seen as the ‘norm’ to have this debt as an adult who wanted to own their own home. Although over the years I’m seeing a shift in peoples’ attitudes towards debt including mortgages and find it’s becoming more popular to try and pay mortgages off earlier than the previous 25-year term.

Remember if you put your outstanding mortgage amount in as a liability to include the value of the house as an asset. If you only put the mortgage amount in your liability column it won’t accurately reflect your net worth and will show a negative. You can get an approximate value for your house through Zoopla Also do this for any loans taken to buy assets, for example car loans and loans for plant and machinery.

Is knowing your net worth important?

In the whole scheme of things, it all comes down to personal preference, but it may be something you want to look at if you are looking to focus on your overall financial position. Whether you want to increase your wealth or to use it as motivation to pay off debt. I think it can be an important tool to access your assets v liability ratios and to make sure you’re not over committing yourself with debt.

Also, you can use it to check the diversity of your financial position. Diversification is a way to make sure you are spreading your risk and not putting all your eggs in one basket. So not putting all your money into one asset, like all your money being held only in cash products, or conversely putting all your money into shares or property.

There are many tools out there which will tell you to keep X amount in cash, X amount in shares. But it’s important to realise that there’s not one size fits all because it all depends on how much risk you want to take. It also depends on what age you are, what your immediate, medium and long-term plans are too. For example, there’s no point in putting all your money into long term investments if you want to buy a house in 12 months-time.

Up until this week, I’d never looked at my net worth. But when I started reviewing my pension and see what pensions I had frozen from companies I’d previously worked for, I was pleasantly surprised.

The reason why is because for a first time I have a positive net worth.

I couldn’t believe it. Even with my debt, I have a net worth of + £18,983.80.

This is what my figures look like at 25/10/2021

Assets Liabilities 
Cash Savings£1,468.00Credit cards£16,000.54
Assets Total£34,984.34Liabilities Total£16,000.54
Assets – Liabilities = Net Worth£34,984.34 – £16,000.54 = £18,983.80 +

That’s because when I started work at 21, I paid into a pension with my employer straightaway. I was lucky that I started working for a bank and started my financial journey early.

As happy as I am having a positive net worth, I have decided to ignore it, for now anyway.

I know what your thinking, why would I want to ignore something that is so positive (pun intended lol) and I guess it’s because I don’t want to become complacent and lose my focus that I have to off my debt as quickly as possible.

But I will keep tabs on it every now and then as it definitely gives me a boost when I see the figures going in the right direction.

What net worth should we be aiming for?

I suppose this depends on what we want to do with the money, our retirement plans and how much we want to live off each year. Again, everyone will be different and even I haven’t got the magic number in mind right now.

According to the ONS, (Dec 2020) – the last reported figures in 2020 show the UK having an estimated net worth of £10 trillion, resulting in an average net worth of £150,000 per person. That doesn’t really seem that much at all when you consider how expensive everything is to buy and the problem with this average, it doesn’t consider the huge divide between rich and poor. The poorest people will have nowhere near as much as this and richer will probably have substantially more.

How to Increase your Net Worth?

The magic question, but the answer to this isn’t fancy or hard to do. I think it’s just a combination of:

  • Paying off consumer debt (the bad stuff that doesn’t help buy you assets)
  • Investing as much as you can whilst still enjoying your life
  • Budgeting and being frugal helping you keep your finances in check and stop the overspending
  • Increasing your earning potential by going for promotions
  • Furthering your education if it helps you to get into the higher salary bracket
  • Looking at passive income options; property, making products, books etc…
  • Taking on extra jobs or side hustles
  • Use tax efficient saving accounts
  • Contribute to a pension either through your work or a personal pension

As I’m on my own journey of paying of debt and increasing my net worth, I can only give my perspective but believe success will happen when your consistent and you start getting excited about the numbers. If you’re not a numbers person like me, this can be boring. For you I’d recommend looking at the bigger picture of what those numbers mean to you.

With your numbers going in the right direction, will that give you the dream home, the car or financial security you want for yourself and your family?

Does it mean that you are changing your financial future and giving your children and their children the future you’ve always wanted?

Whatever it looks like for me and you, it’s all different for us all, but going for a positive net worth is definitely one to inspire for.


ONS (2020)


Is a £1000 Emergency Fund Enough?

What is it?

An emergency fund is a pot of money kept in an account that can be easily accessed should you need it in the case of an emergency. An emergency could be classed as anything to happen that is unexpected like car repairs, washing machine breaking down, emergency dental care, house repairs etc …

Although you can plan for some types of emergencies using sinking funds, you can’t plan for them all which is why an emergency fund is so important.

How Much is Enough?

An emergency fund, when built up big enough should be able to not only cover the above types of emergencies but also cover your income if you found yourself out of work. Generally, this is recommended by financial experts as being around 3 to 6 months’ worth of expenses. For example, if your expenses are £1500 per month, then you should have an emergency fund between £4500 to £9000 ready to access straight away (3 x £1500 = £4500 or 6 x £1500 = £9000).

£9000 seems a lot, doesn’t it? It would give you peace of mind though, I know it would for me.

According to Finder (2021), 9 % of people in Britain have no savings at all and 41 % wouldn’t be able to be out of work for even a month with no pay, another shocking reminder why savings and emergency funds are so important.

Should you Save an Emergency Fund before Paying off Debt?

Yes! Definitely!

You should save your emergency fund first before making those overpayments on your debt. Then when you have a minimum of £500 to £1000 you can start overpaying on debt. This will make sure that you’re covered for when those pesty emergencies happen and gives you peace of mind knowing when they do happen you don’t have to go further into debt to get the repairs fixed.

Starting to Build Your Emergency Fund

When you first start building an emergency fund, I found that starting small was the best way for me, so my first emergency fund was £500. The problem with an amount as low as £500 is if two emergencies happen at the same time well your pretty stuffed aren’t you?!

And I don’t know about you, but many things break at the same time for me! Last year my 11-month-old washer broke and I had a leak through my living room ceiling from the bathroom all within days of each other. The £500 only just covered the repairs for both and then a week later I had to pay for new tyres on the car which I was then forced to put on a credit card.

Life just happens this way doesn’t it? Well, it does if you don’t have an emergency fund.

Learning my lesson, I decided to follow Dave Ramsey’s advice and save an £1000 emergency fund which I kept in an instant access savings account connected to my current account so if I needed the money I could do an online transfer immediately.

Then life happened. My car goes in for an MOT and surprise surprise, it fails with the repairs costing a whopping £606. If I kept only £500 fund I wouldn’t have covered the costs. Luckily, I had my £1000 emergency fund and could pay in full with cash! Phew!

But then a few days after getting the car back, I was sitting in my living room waiting for my daughter to come out of the shower and I noticed a shiny spot on the wall. On closer inspection, I rubbed my hand across the wall and it was wet!! I rushed upstairs and after taking off the bath panel, to my horror the underneath of the bath had an inch of water in it! What an absolute nightmare. I soaked up the water and pondered getting a plumber out.

I had just under £400 left of my emergency fund so I decided to try and fix the problem myself first

I know what you’re thinking, I have zero plumbing skills but the last 3 plumbers I have used have either ripped me off, not completed the work they were paid for or done half a job, so I really don’t want to waste anymore money.

As I write this post, my bath panel is still off whilst I dry out the floor. I have sealed around the bath taps which were loose and could have been allowing water to seep through and I have put a small bowl under the pipes to catch any more of the water. It’s not flooding anymore but it’s also not fixed. But it will do for now.

Anyway, I digress.

Is £1000 enough for an emergency fund? I would say no it’s definitely not enough.  

Not wanting to disagree with Dave Ramsey and other financial gurus out there but what does £1000 really buy these days? With inflation running typically around 2 % (ONS, 2021) (Macrotrends, 2021) your money buys a lot less than it used to, so maybe an £1000 emergency fund is a little dated now?

I mean, it’s a pretty good place to start but my plan is now to save at least £1500 and then continue to contribute with £50 a month until it gets to 3 – 6 months’ worth of expenses. I will continue to do this until all my debt is repaid and when I’m debt free I will 100 % focus on building this up to at least 6 months of expenses. I know this will give me peace of mind then.


Finder (2021) Savings Statistics: Average Savings in the UK 2020.

Macrotrends (2021) UK Inflation Rate 1960-2021.

ONS.GOV.UK (Office for National Statistics) (2021) Consumer Price Inflation, UK July 2021.