If you watched this week’s episode of Money Talks, you know we explored what wealth actually is. (Spoiler alert: wealth and money are not the same thing).
If you have a lot of money or a lot of cool expensive stuff, you might be wealthy. But you may just be spending every penny you make.
Wealth is a measure of your assets and your liabilities. The Federal Reserve Bank even tracks this data. You can check out the interactive graph here.
In determining wealth, the Federal Reserve Bank looks at your assets and your liabilities. Assets are things you have that generate money. Liabilities cost you money. The goal is to have more assets than you do liabilities.
Assets include real estate, corporate equities and mutual funds, pension entitlements, private businesses and consumer durable goods. Consumer durable goods are things that don’t wear out quickly, like cars.
Liabilities include mortgages and other debt like student loans. The difference in your assets and liabilities is called your “net worth.” If your assets are worth more than the debt you owe, you have positive net worth.
If you’re just now understanding that wealth is more about your financial goals than the number of comments in your bank account, then join the conversation.
We want to know what questions you have about financial planning and money. It’s a difficult topic that’s been further complicated by the COVID-19 pandemic.
You can email your questions to reporter Anna Beahm at firstname.lastname@example.org or submit them to us through the form below: