VIDEO: Are You Really Broke? Let’s Talk About Net Worth
- Leon Park
- May 10
- 2 min read
Hey guys! My name is Park, and welcome to the Practical Prosperity blog—the place where we break down money matters without the fluff.
On today’s episode (and in this post), we’re diving into a question that messes with a lot of people’s heads:
What is your net worth—and does it mean you're broke?
Let’s break it down.
💡 What Is Net Worth, Really?
“Net worth” might sound like a fancy financial term, but it’s actually super simple.
Net Worth = What You Own – What You Owe
That’s it.
You take your assets—the things you own that have value—and subtract your liabilities—the things you owe.
🏠 Assets vs. Liabilities
Let’s make sure we know what goes into each:
Assets include:
Your home or property
Retirement accounts (like 401(k)s or IRAs)
Investments (stocks, bonds, etc.)
Valuable personal items (cars, jewelry, collectibles—only if they hold real value)
Liabilities include:
Student loans
Credit card debt
Car loans
Mortgages
"Buy now, pay later" services (like Affirm or Klarna)
Yes, even that monthly payment for your new phone counts as a liability!
🧮 A Real-World Example
Let’s say you own a house worth $1 million. Sounds impressive, right?
But what if you only put down 10% ($100,000) and still owe $900,000?
Here’s how that looks:
Assets: $1,000,000 (home) Liabilities: $900,000 (mortgage) Net Worth = $1,000,000 - $900,000 = $100,000
But here’s where people get it twisted...
If that $100K was borrowed or refinanced, or if you’ve got other debts (for example) $40K in student loans, then:
Total Liabilities = $100,000 (Down Payment) +$40,000 (student loans)
+$900,000 (Mortgages) = -$1,400,000 Net Worth = $1,000,000 (Houses value) - ($1,400,000) = -$400,000
Boom. You’re living in a million-dollar house, but your net worth is negative. In other words: You are broke. Literally.
💬 Final Thoughts: Why Net Worth Matters
Net worth isn’t about ego. It’s about understanding your true financial picture. You could drive a luxury car and still have a negative net worth. Or live modestly and quietly build wealth.
This number gives you clarity—and a target.
📌 Want to take control of your finances? Start tracking your net worth today. Use tools like Mint, Personal Capital, or even a simple spreadsheet.
And remember: it’s not where you start, it’s where you’re going.
Thanks for reading, and if you enjoyed this breakdown, check out the full episode on my YouTube channel: Park's Finances!
Until next time—keep building wisely. 💸
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