"Be sure you know the condition of your flocks, give careful attention to your herds." – Proverbs 27:23
I’m going to go way out on a limb and guess that you don’t have very many sheep or cattle to look after. But you probably do have investments, a home, a car, and some other stuff. All are modern-day equivalents of the flocks and herds of biblical times.
While the Bible teaches us not to obsess over our stuff or to make it the focus of our life, it does instruct us to pay attention to our assets and keep tabs on their condition.
The end of the year is a good time to assess the condition of your finances and make plans for improvement in the year ahead. The classic net worth statement is one useful tool. It helps you see if you are making financial progress.
However, it also completely misses some very important aspects of our financial lives. To help fill the gap, consider your experiential net worth and your emotional net worth. Did they grow over the past year? How could you increase them in the year ahead?
Experiential net worth
There’s a large body of research pointing to the fact that experiences give us more joy than the fleeting pleasure of things. So, as you think back on the year, what were some of your better experiential "investments?"
They might include classes you took that enriched your life or trips you went on that added to your memory bank. Each summer, we vacation with extended family. I can still see our kids running on the beach with joyful abandon on vacations from long ago, and those memories will add to my life for years to come.
Charitable giving is also part of your experiential net worth. Depending on where you make such contributions, they can constitute investments of truly eternal value. And the joy you derive from generosity deserves some acknowledgment as well.
Some such contributions won’t even show up on your tax return, such as financial gifts you gave to friends in need.
For charitable giving, you could add up the actual amount you gave, but also see what percentage of your income you gave away. There are two reasons for this. First, the Bible teaches us to base our giving on a percentage of income (see Deuteronomy 16:17 and 1 Corinthians 16:2). Second, if your income went down this past year but the percentage that you gave away remained the same, that’s reason to celebrate. In essence, you were just as generous as when your income was higher.
There isn’t one absolutely right way to assess your experiential net worth. The important thing is to remember your best experiences from the last 12 months and acknowledge the value they added to your life. Write them down.
As you think about the year ahead, how could you use money to build your experiential net worth? Are there experiences you'd like to have or memories you'd like to make with loved ones that may not be possible when you're older?
Emotional net worth
Emotional net worth has to do with how you're feeling about your finances — your financial confidence, contentment, stress, or fear. These are subjective measures, to be sure, but it’s helpful to think about such factors nonetheless.
As you look back on the year, what overall emotion best describes your financial life? And what financial changes may help you get to a better place in the new year? Would a stronger emergency fund help? Or more knowledge about a particular financial topic? Do some reflecting and make some notes.
Other aspects of net worth to consider
Some additional ways to think about your net worth include:
Relational Net Worth. How did your use of money this past year impact your most valued relationships? Did you have any recurring financial disagreements with your spouse? What money-related changes or investments in the year ahead may pay the best relational dividends? For example, my wife and I plan to invest in our marriage by going on a marriage retreat and reading a marriage book together in the new year.
Physical Net Worth. Did you make any investments in your health this year? Should you make any in the New Year?
How might thinking about net worth in these ways shape your use of money in the coming year?
