In December of last year, Albert Pujols signed a new contract with the Los Angeles Angels of Anaheim worth $240 million dollars over the next ten years, plus incentives. In March of this year, Calvin Johnson signed a new contract with the Detroit Lions worth $132 million dollars over the next eight years, plus incentives. Many of you who know me personally are well aware that I am an avid sports fan, and I must confess that all of these signings, trades, draft picks, and mega-deals got me thinking…
What am I worth?
I asked around to see how much I'm worth, and here is what I found:
According to the Atlanta Braves: $0
According to the Atlanta Falcons: $0
According to the Atlanta Hawks: $0
According to the Atlanta Thrashers: nevermind…
According to Lucy (the family dog): 1 cup of Purina per day and occasionally a chew toy
According to my mother and MasterCard: priceless
All kidding aside, knowing how much you are worth is unbelievably important. It allows you to competently make big purchases and plan for retirement. It allows you to sleep better because you know where you stand financially. If you aren't an unbelievable athlete paid handsomely for your abilities, you are worth what you own minus what you owe. The difference you are left with is called your net worth.
To calculate your net worth, get some paper, start a nice spreadsheet, or check out the interactive template at the bottom of this page. List what you own including bank accounts, investment accounts, your 401(k) at work, the value of your cars, the value of your house, the value of your furniture, and that savings bond your grandmother gave you. After you feel like you have captured the value of most of your possessions, list what you owe. List credit card balances, student loans, mortgages, and that outstanding March Madness bet you still haven’t paid to your old college friend. Subtract what you owe from what you own, and you will know how much you are worth.
Now that you have calculated your net worth once, save your work and you will be able to easily update it as time passes. This will allow you to see if you’re headed in the right direction and if you are making progress towards your financial goals. You can also gain valuable insights like how much insurance you might need to protect your assets, if you need to reevaluate your estate plan based on the current exemption amounts, or if you are beginning to spend more than you are earning. You may also realize that the net worth of someone with a $300,000 house and a $200,000 mortgage might not be that different than the net worth of someone with a $3,000,000 house and a $2,900,000 mortgage.
Most people will never make “Pujols money” unless they find a winning Mega Millions ticket, but it doesn’t mean they shouldn’t know how much they are worth. I just figured my net worth, and I am happy to report it is somewhere between Lucy’s response and my mother’s!
P.S.: The Braves didn't do much in free agency this year, but they'll bounce back. Can't stop the chop! Go Braves!