Although crunching your own numbers can be a beneficial practice, you don't have to freak out if your net worth isn't where you want it to be (really). For proof, just look at Basu Ratnam, former financier and founder of INDAY, the buzzy New York City fast-casual restaurant empire.
“As an entrepreneur, you kind of have to delink self worth and net worth as much as possible,” Ratnam says. “Because in the early days [of your career] and early stages of building your own business, your financial net worth almost inevitably—either in terms of cash flow or equity value that you’re building—is going to take a hit.”
Below, we break down how to determine your net worth, what it really means for you, and why there are better measures of your current financial or life situation if you're still figuring things out.
Keep reading for an empowering lesson on net worth versus self worth—and a financially savvy pro's strategies to give both a boost.
How to calculate your personal net worth
Your net worth is the sum of all your assets (cash, property, stocks) minus debt (think credit-card charges, student loans, home loans). But the number doesn’t paint a full picture of your financial situation all of the time. For example, your total figure wouldn’t take into account the post-grad class you splurged on now to land a better job later, or the fact that you're re-investing cash into your business like Ratnam.
“Early on, part of what you’re building is equity that can’t always be monetized,” he says. “The journey is part of your net worth, part of who you are, and isn’t always paper.” In other words, enjoy the ride and worry less about the fluid mile-marker.
Once you’re at the point where you do want to prioritize raising your net worth, dedicate time to financially plan for the future. “Everyone should take time at the end of the year to think about what their goals are and plan backwards,” advises Ratnam.
Thinking about your personal goals will help you save and budget accordingly. “Goals are really important because they help crystallize what you need in order to be happy or in order to feel like you’re progressing in life,” he says. Bingo.
Why you shouldn’t tie your net worth to your self worth
The amount of cash in your wallet and bank account might be in flux for various reasons. (Hello, life.) So your net worth right now, just like your annual salary, isn't something that should dictate your own sense of empowerment or identity.
“I think finding meaning, purpose, and fulfillment in your life shouldn’t come 100 percent from your professional endeavors and day-to-day work—and I don’t think it should come 100 percent from your net worth,” Ratnam says.
Instead, give yourself credit for fulfilling personal milestones, working to check items off your bucket list, and nurturing your relationships. “Engage in the things you want to be engaged in and invest in the relationships that really make you happy, and free up the space to enjoy the beautiful moments when you can," Ratnam says. "To me, that's the source of what your self worth should be.”
How to prioritize your wellbeing while growing your nest egg
Whether you’re working hard to climb the career ladder, jumpstarting a new business, or striving to save for a big goal (ahem, year-long sabbatical), it’s crucial to maintain a full tank of gas.
“[Good mental health] is the cornerstone of living a fulfilled life,” Ratnam says. “I think having a clear mental state, having a reservoir of energy, good will, and positivity to draw from, and the ability to recharge is very important.”
The entrepreneur relies on daily meditation, healthy meals, and movement to maintain his sense of calm and stay focused on the task at hand: offering New Yorkers nourishing fuel to help them stay balanced, too. That means your own wellness routine just might be the formula for chasing your dreams.
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