Wealth is Good
Cash Flow Is Better

Have you ever wondered how you’re doing financially compared to others?  If you’re like me, it’s pretty hard to pass by those articles that show the average earnings of U.S. workers by occupation type.  Usually my first thoughts are:

– Am I doing better than others in my field?

– Which occupations tend to pay more?  Which pay less?

But is salary the best measure of how well you’re doing financially?  It certainly is a good, quick measure of how much money you’re taking home at this time in your life, but isn’t what you do with that money even more important?

Case in point: Our oldest son recently graduated from college and was fortunate enough to land a real job in the education field.  After six months or so he complained that some of his other friends were making a higher salary than him.  So I asked, “What are they doing with it?”  Hmm.  That one caught him off guard.  Turns out tat our son has a tidy (and growing) amount stashed away in savings and even stocks.  His friends don’t.

So maybe adding up your savings and investments and the other things you own – your assets – is a better measure of how well you’re doing.  After all, these are the things you’ve acquired over the years with your salary.  But don’t forget about the flip side – the debts, or liabilities, associated with some of those assets.  Things like education loans, car loans, credit card debt, and mortgages should be part of the equation, too.

In fact, the full equation is:  ASSETS – LIABILITIES = NET WORTH

Net worth measures your wealth, and that’s an even better measure of how well you’re doing financially than your salary.

Curious to see how wealthy you are compared to others like you?  Use this tool to find out.      Read the full article at:  http://www.wisebread.com/its-10-pm-do-you-know-where-your-net-worth-is

Keith Whelan is Cashflownavigator's founder and author of the "Wealth is Good, Cash Flow is Better" e-booklet. He is a graduate of Columbia University Business School, teaches at Rutgers University, and has over 30 years experience in the banking and financial services industry. Keith, his wife Cindy, and their two sons live in New Jersey.