For accountants,
your personal net worth is one of the simplest calculations they might be asked
to perform. Add up your assets in column A, add your debt in column B, then
subtract B from A to find your net worth. It's a number you should know, or at
least be able to estimate, and it's good to check it every year. Since
it's the beginning of a new year, the sweet spot between New Year's resolutions and tax time, there might not be a better time to figure out
your net worth than right now. When you do, don't forget all of the value
that might not translate into worth. We've got a short breakdown for you,
along with a way to maximize the value in your life while minimizing how much
it costs you:
Your education increases your net worth, even though it may not
look like it. Very few investments offer the rate of return that
continuing education does. Those who finish their college degree earn, on
average, about twice as much as those with a high school diploma over the
course of their lifetimes, and the gap has been widening for at least 35 years.
Still, your future earning potential doesn't show up on your net worth,
even though your student debt does. If you're trying to decide whether to
go back to school, take a few extra classes or get a new certification, the
cost may seem intimidating since there's no immediate benefit. Don't let
that fool you.
An education can also increase the value you get out of your life,
helping you find a job that makes you happier or getting that promotion you've
been wanting at your current employer. Outside of work, going back to
school can help you learn a new language or skill you've always wanted to
learn, get you up-to-date on current technology and trends in your field, and
model good life choices for your children. Just wait until they see you
doing homework on a Friday night!
It also doesn't have to cost an arm and a leg, and you don't have
to try for federal financial aid. We have a variety of products designed
to put some money in your pocket now, whether it's a home equity loan, a
personal loan, or any of our other financial plans. If you're thinking to
yourself, "But I'll be 40 (or 50, or 60) by the time I finish,"
remember, you'll be 40 (or 50, or 60) anyway.
Find out information about our loans that could make it happen
here: penair.org/Loans
Your kids are a drain on your net worth, but a blessing in your
life. Let's face it, kids are expensive. The Department of
Agriculture estimates that raising a child born this year to the age of 18 will
cost about $250,000. While a quarter of a million dollars is a lot of
money, that only gets them to age 18, but with tuition prices skyrocketing and
kids staying at home longer than they have historically, the actual figure of
raising children today gets much higher much faster. Financial analysts
predict the average four-year tuition for a public university in 2030 will be
$250,000, or about the same as it cost to raise that child from birth to
dropping them off at the dorm. If you have two children, you could easily
spend one million dollars on them before they leave college. In your net
worth, this is only reflected as a constant drain on your savings, a net
negative.
The value of children is probably pretty obvious to you, but there
has to be a way to lower the cost of raising them, right? First, let's
cut down those college costs, because that's half the battle. We've got a
variety of college savings programs that offer great returns while also being
tax-deductible. Getting to $250,000 might seem like a pipe dream, but
saving even a little every month can add up quickly, thanks to compound
interest.
Next, let's find a way to save money on school while helping your
child now. There are a lot of ways to encourage a gifted child, from
tennis camp to musical instruments. If your child wants to stare at the
Internet all day, maybe you should talk to them about a new laptop and some
software engineering classes for kids. If they like the outdoors (or
you'd like them to go outside occasionally), try a digital camera. All of
these ideas cost money now, but could result in scholarships down the road, all
while giving them a head start on a career or passion they can follow their
whole life. If you're wondering how you can pay for all of that, check
out our money market accounts and share savings certificates. You can
contribute a little money every month, and you'll have enough for those classes
or that camera before you know it.
Your home is your biggest investment. When was
the last time you checked up on it? When you bought your house, it might
have been the best available house in the neighborhood for the price.
After all, if it weren't, you would have bought some other house, right?
Is it still the best in the neighborhood for the price? Is the
neighborhood still regarded the same way by home buyers? How do you know?
This weekend, it's time for window shopping. Take the value of your
home from your last appraisal and check the Internet for houses in your area in
the same price range. How does your house stack up? Make a list so
you can compare between houses. Next, check your decor. When you
moved in, did the house feel a little dated? Did you do anything about
it? How many of the houses you saw online seemed newer or more
fashionable?
After you finish your house hunting, you've got three options:
If you saw a house that you like as much as the one you're in now, but
it's going for less money, you could think about moving there. After all,
mortgage rates are incredibly low for the time being, and if you could be just
as happy in a less expensive house, then that's money you could use on
something else. If your house is as good or better as the others in the
neighborhood, but could use a facelift, you might want to think about
remodeling. Remodeling your home can increase its value and make it
easier to find a buyer, so part of what you spend now may come back to you when
you sell, with the added benefit of living in a nicer house in the
meantime. Finally, if your house is still the best around, think about
refinancing while rates are low. You're probably not going to find fixed
rates this low for a long time (if ever), so locking in that lower rate now can
save you tons of money going forward, while cashing out some equity can help
knock down any pesky credit card debt you need to take care of, so you only
need to write one check every month, while paying far less in interest.
If you're looking for a first mortgage or if you want to remodel, check out our home equity lines of credit
(HELOC) here: penair.org/Mortgage
If you want to see what a refinance can do for you, we've got a
simple form here:
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