What Net Worth Doesn’t Tell You

Michael QuanBeliefs, Education, FI / FIRE, Misc, Net WorthLeave a Comment

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net worth

Net worth is an important money metric, but it doesn’t tell the whole story. It just shows what you have in cash and investments minus your debts. But there are many other factors that you can’t see on paper.

For example, how much time and energy were spent to get these assets? Were there sacrifices of happiness in exchange for this net worth?

What Net Worth Doesn’t Tell You

As someone who shares our net worth each and every month, it may seem strange that I’m writing this post.

But I want to give you the whole truth, not just a portion of it.

While net worth is an incredibly important money metric and a special one when it comes to pursuing FI/FIRE.

You will want to keep in mind what net worth does NOT show you.

Quality of Life

People often covet the lifestyles they see glamorized in media.

Big houses, fast cars, and significance can seem attractive to those on the outside looking in.

But high net worth doesn’t necessarily mean that life is perfect- there are plenty of people who have large fortunes with big problems too.

In fact, we see this all over mainstream entertainment: some wealthy individual worth hundreds of millions may be unhappy with his/her lifestyle choice?

Perhaps it’s because a person’s wealth does not show you their quality of life; perhaps there could be hidden tradeoffs for having such an extravagant existence.

Would you want their life if you knew they sacrificed a ton of time pursuing a career of wealth and prestige, only to realize later this trade-off would cost them their marriage and family?

Don’t Compare (Learn)

The truth is wealthy high net worth individuals come in all shapes and sizes. Some live very healthy and active lifestyles, while others do not.

What’s important to you? How do you want to live your life?

The problem is when we begin comparing ourselves to others.

“Comparison is the thief of joy.”

  • C.S. Lewis

Everyone is different and we ALL come from unique backgrounds and circumstances. So, don’t compare yourself to someone else’s net worth or how long it takes you to arrive at your goal.

However, perhaps there is someone you admire because they worked hard and efficiently which then led to them having a large net worth.

No need to compare, but you CAN learn from them.

Learn from their model of the world and see if you can replicate some of it within your own life.

Success Leaves Clues

What do you value? Is it your time? Your relationships? Or, the impact you are making in this world?

If you know your values, then you can pursue a wealth-building strategy to support MORE of that.

For example, in my book The F.I.R.E. Planner, I share a story about two rich uncles I observed as a young boy.

One was always home and present with his kids and seemed to protect his time doing things he wanted. The other “rich” uncle had a larger net worth, but he was always working. And while I don’t know details, it appeared from the outside that this took a toll on his family life.

I decided that I wanted to achieve the former and I emulated some of his strategies such as real estate. I studied things that he studied, like investing, real estate, and even self-development.

Be Intentional

Now if you’re still excited to be pursuing FI and F.I.R.E., it’s time to develop your WHY.

I knew early on that I wanted enough money to make my money work for me and to give me the FREEDOM of time.

It’s exactly why I retired early from my 9-5 at age 36. I wanted to be fully present with my growing family because that’s what I valued. It was my WHY.

In hindsight, this decision had opportunity costs of millions of dollars (literally). Had I stayed within my executive tech career, I could have easily earned another 7-figures over a 5-7 year span. But that’s not what was important to me.

What’s important to you?

Use Net Worth as a Metric to Measure

I’m constantly updating and tracking our net worth in the Personal Capital because I want to know how much is in my F.I.R.E. nest egg. This gives me a certain level of certainty that we’ll be okay regardless if I work or not.

And, net worth can also tell me how our investments are performing over time.

I pair this metric alongside cash flow because these two combined will give you an insightful snapshot of your financial health.

Net Worth Doesn’t Show Your Risk

Finally, as helpful as net worth can be as a metric, it doesn’t show your level of risk you are holding.

For me, I’m risk-averse. That simply means I don’t like a lot of risks and would prefer less leverage than more.

Consider two people who have a net worth of $1 million dollars.


+$3M of property

-$2M mortgage (liabilities)


+$1M = Total net worth



$250K cash

$500K property

$500K stock portfolio

-$250K mortgage (liabilities)


+$1M = Total net worth


Both have identical net worths… so, who would you rather be?

I suspect based on your values you are gravitating towards a particular one. However, even this doesn’t tell the entire story.

Roger is clearly holding more debt (leverage), but what if he has the potential to have this property value double in 8 years. And let’s say that Alyssa’s property is in an area that doesn’t see a lot of price appreciation.

Does that change your answer?

Final Thoughts

Net worth is a double-edged sword. It can be an incredible tool to help you track your FI and FIRE journey.

Or, it can be an object of envy and desire.

What it means is completely up to you! Choose wisely.

Readers, do you track your net worth? Why, or why not?

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