Facebook Your Net Worth

May 31, 2016 by

Well now, seems quite a number of Money Counselor readers see some merit in my recommendation to post their net worth statements on Facebook.

The idea is to put to good use the normally financially destructive tendency most of us feel to keep up with the proverbial Joneses. Instead of owning a fancier car than the Joneses—which only implies greater wealth—my suggestion is to stop fooling around with indicators of wealth and compete on a real measure of wealth: net worth. But to let that happen, we all need to share our net worth statements with our friends (i.e., all the Joneses in our lives). And what better way to do that than a Facebook post?

Witness the magical effect of public net worth statements:

You might envy a bit less the Jones’s new BMW if you know that they also have $35,000 in high-interest debt and only $9,000 in retirement savings! Now when you see that BMW instead of thinking, “wow, the Jones’s sure are doing well” you’ll be thinking “wow, how are the Jones’s ever going to retire if they keep making these bad money choices?” And since the Jones’s know all their net worth-savvy friends will have this sort of reaction to a BMW purchase, they just might choose a 4-year old Corolla instead.

How to Create a Net Worth Statement

Okay, you and your Facebook friends want to join the public net worth game. But you’re not sure how to create a net worth statement. Easy! Here’s a simple example I put together in Excel:

net worth statement

Net Worth =

→ the value of all of your Assets

minus

→ the total of all your Debts

Start your net worth statement by itemizing your major assets. Take guesses at the current market value—no need to be super precise here, no one really knows the current market value of your house or car anyway.

Then have a look at the most recent statement for each of your debt accounts. The end-of-month balances from each account statement go on your net worth statement.

Total up your assets and debts, then subtract the debt total from the asset total, and you’re done!

What If Your Facebook Friends Won’t Play?

You’ll probably find most of your Facebook friends are reluctant to post their net worth statements. The most likely reason for this is fear of embarrassment. Most of us are worse off financially than we like to let on, right? And we’ve all made dumb money choices, which may be enshrined in our net worth statements.

With luck, you’ll be able to persuade at least a handful of your friends to post their statements. How about agreeing to post simultaneously—what fun you’ll have poring over each other’s finances! “OMG—the Jones’s have $73,000 in student loans and no IRA! And they went to Machu Picchu last year!”

But let’s say none of your friends are willing to post their net worth statements. First, that tells you a lot about their finances right there. But the best way to encourage others to post is to post your own statement. Be bold! Even if no one else participates, you’re going to feel constructive pressure to pay down debt and save more, just because you know all your friends are watching your progress.

So go ahead: take precautions in creating your statement to safeguard your personal information and the security of valuables in your home, then make public your net worth statement. It might be the best money choice you ever make!

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