This section will discuss how we can measure and build wealth. It will outline how to achieve the very realistic transition from being broke to being pre-rich – which starts with understanding where you stand today. So, let’s look at how to perform your own financial health check.

Are you financially fit?

I used to focus solely on my income as a measure of my wealth: if I was earning a lot, I must be rich and if I wasn’t then I must be poor. But earning is only one parameter for measuring wealth. If you don’t save any money and instead spend it all each month, then you will have to keep earning more money to live. This is often referred to as living ‘pay cheque to pay cheque’. Social media depicts being rich as associated with high fashion, fast living, swanky cars, travelling business class, new kicks and threads, and buy, buy, buying material goods. Enough to say that it encourages us – nay brainwashes us – to spend a lot of our money.

Once properly understood, the concept of wealth will change the way you perceive and think about money for good. I learnt that the difference between being broke and being rich is not related to how much you earn but to how much you keep – and therefore how much wealth you can build. This measure of wealth we will call your net worth. Hold on, don’t go – the concept really is very simple. Remember ‘knowledge is power ‘when it comes to money!

Evaluating your net worth is a precise and easy way to monitor and check your financial health… It has nothing to do with your self-worth. It is a phrase that we hear all the time – often in relation to what celebrities earn when they are being written about in the media. What exactly does it mean, and why is it so important for you?

Essentially, your net worth is a snapshot of your financial state of affairs and therefore your economic position. It normally refers to what you own (known as assets) minus what you owe (known as your liabilities). It will tell you how much money you would have left if you were to sell all your assets and repay all your debts ‘today’.

Your net worth will vary over time, because your assets and liabilities will fluctuate (for example, as you earn interest on your savings or repay debts). Monitoring your net-worth is a simple, necessary step towards gaining greater financial independence. Doing this is also extremely empowering because it encourages you to take full control of your bank balance, financial health and ultimately your life. Understanding the numbers on your bank account statement helps you to become more rational with money. It also allows you to keep track of cashflow, set goals and focus on how your personal wealth is evolving.

We earn money and we spend money – this is called cash flow. If there is a surplus at the end of the month, we hopefully try to save it and when there is a deficit, we usually borrow it. (Credit card debt anyone?)

How to calculate your net worth

Your net worth is quick and easy to calculate and it really is such a necessary step towards gaining financial independence. Because it is a simple number, it is easy to track.

Net worth equals what you own (your assets) minus what you owe (your liabilities):

Net worth = Assets – Liabilities

What are assets?

Your assets are items of value that you own:

  • Cash on hand
  • Real estate: house, flat
  • Bank account balance: current account
  • Savings
  • Shares, investments and insurance
  • Car
  • Pensions and retirement savings
  • The value of your business or a start-up
  • Other assets: car, jewellery, furniture, anything of value that you own

The value of your assets has to be accounted for at the current ’market value‘ (that means: how much you would get if you had to sell that asset today at current price) rather than the bought value (the price you paid for the asset).

What are liabilities?

Your liabilities are your debts, or the money that you owe:

  • Mortgages
  • Credit card debt
  • Student debt
  • Other personal loans
  • Car loans
  • Other liabilities

You may have noticed the absence of earnings and outgoings in this first chapter and the net worth calculation. In this exercise, we are only looking at the balances of your accounts on a given day, not at the cash flow (such as paying for groceries, rent and the cost of living). This table is a picture of your financial position today, which is what you managed to keep! You would have paid for these items already, if you haven’t but owe them then there are debts and should be included in the table.

Don’t panic if your net worth is negative. There are plenty of financially healthy reasons for having a minus total: perhaps you have a student loan, or have only just started working. Understanding your current situation is a good place to start, so you can see what can be improved. As soon as you start to save money or repay a loan, you will also start upping your net worth. This is the first step towards building wealth. To achieve this, you first need to find a way to improve your worth. This means breaking down your spending and saving by category, in order to understand where each +/- value comes from. See Chapter 3 for some budgeting tips.

Building up your wealth

In theory, increasing your net worth is simple: you use your income (the money you make, for example from your job or investments) to increase valuable assets while reducing (paying off) your liabilities. Once your assets are worth more than your liabilities, you have positive net worth.

If you want to accumulate wealth, you have to focus on acquiring assets that will appreciate (increase in value) over time rather than creating further debt. Your goal is to have fewer liabilities (such as credit card debt) that cost you money (such as interest) and not to invest in items that will depreciate (lose value).

As mentioned above, your salary is only one way to build net worth (you might have another source of income from some side-hustles for example). The big difference when you start trying to build wealth, is that you start to generate money from other sources: your ‘assets’ (the things you own). The goal, over time, is that these should generate more and more money and allow you to work less and less (and retire one day). True wealth is achieved by acquiring assets that will increase in value and generate money for you.

 Of course your liabilities will also increase because you are paying interest on them. Any outgoings that you are repaying over time, such as credit card debt, loans or a mortgage, will impact your ability to save and build more assets.

How often should I look at my net worth?

Some people recommend looking at their net worth on a weekly basis, but I think it is useful to calculate it monthly or quarterly. Your objective is to see it increase in value, from one period to another, so you know which direction it is going in. Remember that this number is for YOU only – so you don’t need to show it to anyone.

If you want to see how some other people measure their wealth, you can find a selection on the Rockstar financial directory. Thousands of financial bloggers in the USA have been publishing their monthly net worth online, for years. Every month, they reveal their spending and saving secrets to show how they are working on increasing their net worth. These testimonials can be extremely motivating because you can see how many who start out with negative net worth change their net worth to positive as their balance increases over time. Indeed, one of them has been publishing his net worth monthly for 10 years and has managed to multiply his worth ten-fold during that time.

Where do I start?

As a reminder: the main principle behind growing your net worth is to increase your assets and decrease your liabilities. This is, of course, a very broad guideline and we will look into the different ways you can do this in future chapters. For now, here are a few ways you can begin to affect your score:

  • Build an emergency saving net: Because if something unexpected happens, such as your boiler breaking down, you can dip into your emergency fund rather than take on debt (such as credit card debt) to pay for it.
  • Pay off some of your debts: Focus on repaying the expensive debts first, i.e. those that are generating the highest interest rates, such as credit cards.
  • Top up your pension: If you are not already contributing to your employer’s pension or a personal pension plan, you should take specialist advice and start now.
  • Reduce your spending: Calculating your net worth can help identify where you spend too much money and enable you to cut out some bad habits.
  • Save some money: Open an ISA or a cash savings account if you don’t have one already.
  • Make sure your savings are growing and potentially start investing – provided you have taken advice and you understand the risks.
  • Talk to a professional financial adviser.


Be patient. Building net worth is a long process and does not happen overnight. But the big advantage of tracking your net worth is that it gives you an accurate and real picture of where you are financially. When it comes to managing money and saving money, patience is key. There will be ups and downs and unexpected things can happen in your personal life (losing a job, moving to a new house, paying more rent, getting divorced) but this commitment to grow your net worth should remain. You need to be convinced that you can grow this number. It’s empowering and one of the most fulfilling tasks you will ever undertake. Being able to measure your progress should help you to build your confidence around money management and strengthening self-worth.

You’re Not Broke You’re Pre-Rich is available for purchase on amazon here. Emilie Bellet is the founder of  Vestpod –