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Is Your Self-Worth Tied to Your Net Worth?

03/04/2021

3 minutes

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Editor’s Note: This article was co-authored with Heidi Geller.

As your riches grow, do you think of yourself as more valuable, more powerful or more desirable? Do you see yourself as being better or more worthy? Is your self-worth tied to your net worth?

Equating your self-worth with your net worth has some real advantages. It can help you be a good steward of your money. It can motivate and encourage you to work hard, spend thoughtfully, save for the future and invest your money wisely. It can serve as a check on your impulse purchases by preventing you from buying things you may later regret.

However, this mindset can also come with some significant disadvantages. Here are five drawbacks to equating your self-worth with your net worth:

1. It Puts Money Above All Else

This type of mindset can make you lose sight of what matters to you most. It’s not that money doesn’t matter. Obviously, it matters. Money is a valuable tool that we can all use to help create a life of comfort, meaning and joy. It’s just that money is not the only thing that matters, and it is almost never what matters most.

2. It Can Hold You Back from Being Generous

Tying your self-worth to your net worth can keep you from being generous with yourself, your family, your friends and your community. When you measure your value by the size of your bank account, generosity diminishes your self-worth. The more generous you are, the less money you have, so you feel worse about yourself.

It also keeps you from doing something that is great for you. Being generous is good for your health. It can enhance both your physical and mental health and promotes longevity. Generosity can improve your relationships. You feel closer to the people you help, and they feel closer to you. Being generous simply feels good. It engages the same reward pathway in the brain as sex and food.

3. It Can Adversely Impact How You Feel About Yourself–Particularly in Challenging Times

Our sense of self–the value we place on ourselves–matters. When you feel good about yourself, you can overcome your fears and look to the future with hope and confidence. You are more likely to “go for it,” in both business and your personal life.

When your sense of self is diminished, you are often fearful and pessimistic. You may settle for the unsatisfying job or the challenging relationship. You are less likely to dream big or even dream at all.

4. It Can Distract You from What Matters Most in Each Moment

The drive to build your net worth can lead you to work long hours (even while on vacation) and disrupt the important work/life balance. If you’re constantly working to grow your net worth, it can deprive you of precious time with loved ones, such as your spouse, children or friends.

5. It Can Be Contingent on Factors Out of Your Control

This is perhaps the biggest danger with connecting your self-worth to your net worth. What if the market takes a deep and enduring dive? What if you suffer a business setback through no fault of your own? What if some other catastrophic event occurs that materially reduces your net worth? Does it really mean you are less of a person? Of course not.

Self-Worth Is About More Than Money

Pause for a moment and think about someone you admire and respect. What makes them a person of value? Admittedly, we sometimes admire and respect people who have a lot of money. It’s not, however, their wealth we admire. It’s the qualities they exhibit to build that wealth.

As wealth managers, we understand the importance of responsible financial planning and money management. We understand the importance of having money. It can reduce stress and create opportunities. It gives you the resources to live a comfortable life, support your family and contribute to your community.

Being a good steward of your money, however, is not what drives your value as a person. Your intrinsic value does not rise or fall with the ups and downs of your net worth. You are valuable because you are you, in good times and bad times.

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