There is a number on the dashboard of software for personal finance, according to financial gurus it one of the three most important numbers in your life. Your credit score and age are the other two. There financial indicators are more important than good works, ethics or morality. The other number is your net worth. Visit Ted Bauman at medium.com to know more
— Ted Bauman Guru (@Ted_B_Guru) November 27, 2017
There is a difference between value and price. The amount of money that someone wants in exchange for something is price. Such as paying $1.75 at Starbucks to get a grande, or buying a video game console for $299.
The subjective assessment of the usefulness of something is its value. While the price of the video game is set at $299, there are other things that you can do with that. Value is supposed to be indicated by price in the market, but they can become detached from the value. An example would be the toys children spun on their finger and the prices were high because of the demand until the children got bored with the toy. When demand dropped so did the prices.
Adding time to the relationship between price and value is where you get the net worth in the picture. Learn more at Seeking Alpha about Ted Bauman
The Next Generation
At retirement the assets making up net worth are usually cashed in, including homes. Some people sell their home to pay for assisted living to live out their remaining days in and be taken care of. If the younger generation does not have the money to buy the homes at the price used to measure net worth there could be a problem.
It looks like today’s younger generation will not be financially stable in 2037. The worth of every household would be $56,540 if the wealth was equally divided according to the global wealth report from Credit Suisse Research Institute. The top one percent have more than half the wealth with the average wealth being just over three and a half thousand dollars. Those who are worth more than the median is in the fifty percent of the richest of the population. Increasing inequality means that the numbers going into retirement might be faulty.