Many, if not most, PF bloggers consider net worth to be the most important financial measurement. It certainly is the most common. This makes sense because it is pretty easy to figure. Just subtract your liabilities from your assets and you have your net worth. For the most part it is probably a pretty accurate measure of one’s financial status. However, there are plenty of situations where it is not a meaningful measure of indicating one’s financial status.
My net worth is roughly -$65,000 and it will get worse before it gets better. It is negative because of the loans I’ve taken out for law school. My net worth doesn’t reflect any value I’m receiving from going to law school. If I don’t complete law school there won’t be any value so maybe that is accurate. Right now though I have a lower net worth than the homeless guy begging for money on the street corner. Few people would think he is better off than me financially though. It will be a long time before my net worth is positive even after I finish law school and get a job. That makes net worth not a meaningful financial measurement for me. I’m not sure what measurement would be the most meaningful to me but I’m going to be focusing on what percentage of my income I’m dedicating to savings and debt repayment. That should give me a good idea of what progress I’m making.