Get a glimpse of what it’s like to relish life in the Hub of the Americas. Diego Cervo / Shutterstock.com
Editor’s Note: This story originally appeared on Live and Invest Overseas. It’s been nearly five years since I packed my bags and left the tropics. I have to admit that I was more than eager to move on from Panama. I had waited so long to get back to Paris. Plus, knowing that Panama would always be in my future, I didn’t feel overly sentimental when I left in the last weeks of 2018.
Staying informed about your net worth can help you understand whether your financial situation is improving. Learn more here about how to do it — and why.
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The median net worth in the United States was $192,700 in 2022, with net worth tending to increase with age. In fact, the median net worth of Americans under 35 was $39,040, while the median among Americans aged 65 to 74 was $410,000.
Do you know what your net worth is or how it compares to your fellow Americans? If you don’t, you should. Your net worth is one of the most important financial numbers in your life.
Unfortunately, many people aren’t aware of this number or how to calculate it. In fact, one study found as many as 51% of people were unaware of how to figure out what their net worth was, including around 61% of women and 40% of men.
If you are one of the many Americans who don’t know their net worth, or why you should track it, here’s some insight into why this number is so important and how to figure out yours.
Your net worth can help you measure your financial situation by looking at the big picture. Basically, to determine it, you’d add up the value of all your assets (the stuff you own) and subtract the total amount of your liabilities (your debts and obligations).
So, for example, you’d want to add up how much money is in your checking account, savings account, brokerage accounts, and other investment accounts. And you’d want to estimate how much your home, car, and other personal property is worth. Then, you’d subtract the debt owed on your credit cards, personal loans, car loan, mortgage, and any other debts. Here’s an example:
Say you own the following assets:
A home valued at $550,000A car valued at $30,000A 401(k) with a $35,000 balanceA checking account with $15,000Personal property (like furniture and jewelry) worth $75,000
And you have the following debts:
A $475,000 mortgageA $15,000 car loanA $5,000 personal loanA $2,000 credit card balance
You would add up your total assets to find that you own $705,000 worth of stuff. Then you would add up your debt to discover you owe a total of $497,000. Subtract what you owe from what you own to discover that your net worth is $208,000.
You can input your own numbers to find out your net worth, which is often considered to be a measure of your total wealth.
Tracking your net worth is really important for two reasons:
Looking at this number shows you what you actually own and how close you are to becoming financially independent.Tracking this number over time shows whether you are making good progress toward your goals.
Say, for example, you were told that someone owned a $5 million house while another person owned a $150,000 house. You might think that the first person was “richer.” But, if the first person had a $4.9 million mortgage and $1 million in other loans and the second had no debt at all, the second person would be in a better financial position.
The second person’s net worth is higher — and it’s a more accurate estimation of their wealth than just looking at what they own. Getting this kind of full picture of your own finances can be really helpful in showing you how close you are to developing enough wealth to be financially secure.
You can also see if you’re moving in the right direction when you track this number. Many people start out with a negative net worth when they borrow to buy their first car or to earn a degree, for example. But then as they acquire more assets, like a house that goes up in value, their net worth turns positive and keeps growing. If that’s not happening to you, you can make some changes, such as increasing your income so you can save more money, or paying down current debts.
The good news is, tracking your net worth is really easy. Just add up what you own, subtract what you owe, and you’ll know exactly what yours is. You can do this every six months or every year to see your progress over time and ideally, you’ll find yourself getting richer.
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Families who own their own businesses have higher household wealth compared with those who don’t. Learn why it’s worth starting a small business.
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Around 20% of families owned businesses in 2022, according to research from the Federal Reserve. This includes any families where they either reported owning a company of their own or where the family indicated that they were self-employed.
While most people are not small business owners (or large business owners), there are two big reasons why becoming one could be a smart financial move.
One big reason to own a business is that when you have a company of your own that’s successful, you tend to make more money. In fact, the Federal Reserve reported a mean income of $173,200 for families who own a business without any employees, and a mean income of $617,000 for families who own a business with five or more employees. For families who do not own a business, their mean income is $105,500.
Of course, this does not mean every person who owns a company earns a six-figure income. In fact, many companies are unprofitable and fail. But if you have a solid idea and a solid business plan, becoming an entrepreneur gives you a better chance of striking it rich. Likewise, working for yourself means you have more direct control over your earnings, which can make it easier to earn more money and keep your business bank account in the black.
As a small business owner myself, I know that if I have a lot of expenses coming up, I can choose to hustle and earn more in the course of a month so I can more easily cover those bills. If I worked for a traditional employer and just received a set paycheck for the same amount of work, it would be a lot harder to save up.
There is a downside, though. Business owners report more uncertainty about their earnings than non-business owners do. You won’t have that regular paycheck you might currently rely on, so you need to be comfortable doing what it takes to make the business profitable.
Business owners also have a higher net worth, according to the Federal Reserve. The mean net worth of families who didn’t own a business in 2022 was $570,000. By comparison, the mean net worth for those who own a business with no employees was close to $1.1 million. And that excludes the value of the business, so that means company owners have more assets outside of their business as well.
For those who own a business with employees, their net worth is even higher. Business owners with two to five employees had a mean net worth of $1.6 million in 2022, and those who own companies with more than five employees had a $1.4 million mean net worth.
This additional wealth can likely be explained by the fact that business owners have more income to invest, so they can acquire more assets that help them grow richer.
If you want a higher income and a higher net worth, you may want to start thinking about joining the 1 in 5 Americans who own businesses. Of course, there are some pros and cons to consider as well, including:
The tax implications of starting a company: You will have to pay self-employment taxes, which means you’ll pay more toward Social Security and Medicare since you won’t have an employer to cover those costs. However, you may also have more flexibility in how your income is taxed and in the deductions you can qualify for.The lack of job benefits: You’ll be responsible for your own health insurance, retirement plan, and other workplace benefits. This can be a big added expense. Plus, you won’t get paid time off, so you’ll have to plan ahead if you don’t want to lose income when you take a vacation or a sick day.The flexibility: You can decide what tasks you do versus what you hire employees to handle. You can also set your own work schedule based on how quickly you want to grow your company.
You don’t have to jump into opening a company today, but start thinking about whether the lifestyle would work for you — and what skills or interests you have that you could potentially leverage into a business of your own. Whether it’s opening an Etsy shop or doing landscape design or even just going out on your own in the field you already work in, there could be an opportunity that jumps out. For example, if you’re currently an accountant with a large firm, maybe you can open your own.
If you can brainstorm a list of two or three business ideas, and you feel ready to take on the responsibilities of entrepreneurship, you may just find that there’s something you can focus on that could turn into a viable business opportunity over time.
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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Christy Bieber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Etsy. The Motley Fool has a disclosure policy.
If you’re living without any savings, track spending, find a fixed expense to cut, and aim to increase your income. Learn more about your options here.
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Living paycheck to paycheck is the norm for many people across America. A good 60% of Americans indicated they were living paycheck to paycheck at the start of this year. If you’re one of them, you probably already know this means you empty your checking account between paydays and are left waiting until your next check arrives to cover upcoming bills.
If this is your reality, it’s undoubtedly stressful. After all, any surprise costs could make it impossible to make your funds stretch further until the next time you get paid since there’s no wiggle room in your budget. And that could mean you get stuck in credit card debt.
Escaping this situation may feel daunting if your pay simply isn’t enough to afford basic necessities. But the good news is there are steps almost anyone can take to try to improve their financial situation and break the paycheck-to-paycheck cycle. Here’s what those steps are.
Keeping track of your monthly spending can be one of the best ways to stop living paycheck to paycheck.
See, some people don’t realize where their money is going — or how much is wasted on stuff that isn’t adding a lot of value. By writing down every purchase, you can spot patterns and problems in your spending that you can change so you have more money left over by payday.
There are budgeting apps that track your spending, but manually doing this and entering it into a spreadsheet often works better as it forces you to acknowledge where your money is going in a way that just looking at numbers on a screen won’t necessarily do.
Once you’ve kept track of your spending for about 30 days, see what you can cut. Since you’ll know where you’re starting from, you’ll be able to be more realistic. If you’re spending $1,000 on groceries a month, for example, you probably can’t cut that to only $250. But you could discover that a lot of this money is going to buying meat products, and switching to a few plant-based meals weekly could make a noticeable impact.
Another helpful way to break the paycheck-to-paycheck cycle is to reduce a fixed expense. If you do this once, it will free up the money indefinitely that you used to spend on that expense.
Say, for example, you sell your expensive new car with the $500 a month car payment and get a cheaper used one that comes with a monthly payment of $250. Going forward, you’ll have an extra $250 a month to add to your savings.
Increasing income can be another great way to stop living paycheck to paycheck. If you have more money coming in but you don’t increase your spending, you can keep that extra money as a financial cushion or pay down credit card debt.
Doing a side job for a few hours a month is one option to increase income. You could also talk to your boss about opportunities for overtime or advancement. Or you may even want to consider looking for a new job if you don’t think you’re being paid a competitive wage.
If you are living paycheck to paycheck because you aren’t being paid a living wage, the steps above can still help you — but they may not be enough. In your situation, it’s worth looking into what kinds of benefits may be available to you.
You may qualify for programs to help you lower housing costs, pay less for food, or reduce medical insurance costs. Checking Benefits.gov is a good place to start to see what kinds of government assistance may be out there.
If you qualify for assistance, don’t hesitate to take advantage of it. That’s what it’s there for, and the extra help could give you the breathing room you need to start saving an emergency fund and improving your personal finances over the long haul.
Ultimately, the only way to stop living paycheck to paycheck is to bring in more money or cut expenses. Give these four steps a try today to see if you can make that happen.
If you manage to make more or reduce your spending, check out the best high-yield savings accounts so you can open an account and start building an emergency fund that will break the paycheck-to-paycheck cycle for good.
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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Christy Bieber has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.
There are a few considerations to make if you’re borrowing via a personal loan. Learn more about how personal loans work here.
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Getting a personal loan can be a major financial decision. When you apply for a personal loan, you will be taking on a commitment to pay back the debt. You can use the funds for anything you want, but will have to pay back the full amount — with interest.
You don’t want to rush into this borrowing option without understanding some of the basics about how personal loans work. Here’s what you need to know.
As of August, 2023, the average personal loan interest rate was 12.17%, according to the Federal Reserve Bank of St. Louis. But the rate you end up with will be based on your financial credentials, as well as whether you pick a fixed or a variable-rate loan.
A fixed-rate loan will usually have a higher starting rate. But the interest rate you start with is the one you keep — it won’t change over the entire time you are borrowing. Your monthly payments will be predictable, and you’ll know from the beginning how much you’re paying in total to borrow.
A variable-rate loan (also known as an adjustable-rate loan) may start out with a lower interest rate, but that could change over time. Your payment and total costs could increase. The specific details will vary, depending on how high the rate can climb and how much money you borrowed, but your costs could increase a lot if rates go up during your loan term.
When you take out a personal loan, you can’t just borrow any amount of money. There are minimum and maximum borrowing limits. For example, you might have to borrow a minimum of $1,000 or $5,000, depending on the lender. And you’ll be capped at how much you can borrow. This may be a high cap — some lenders allow you to borrow as much as $100,000.
For this reason, if you only need a fairly small amount of money, a personal loan may not be the right way to borrow. It’s a bad idea to borrow more than you need, as you’ll have to repay the loan and pay interest on the full amount. Do your research to ensure the lender you’re considering offers loans of the size you need.
When you get a personal loan, you decide up front how much to borrow and get that money all at once — then start paying interest on the full amount. As you pay down your loan, you don’t get to borrow more either. Say you borrowed $10,000. You get that $10,000, interest payments are calculated on the full balance, and you keep paying until the balance is $0. If you’ve paid off half the loan and need to borrow another $5,000, you’d have to apply again for a new personal loan.
This is different from borrowing via a credit card. If you were given a $5,000 limit on a card, you would be able to charge as much or as little as you want up to $5,000. If you charged $5,000 and then paid some or all of it back, the credit would become available for you to use again. So, if you paid your balance down to $1,000, you could borrow up to another $4,000 at any time. This gives you more flexibility.
Personal loans also have their own unique payment process. Specifically, you decide up front how long your payment term will be, and then your monthly payment is calculated based on how much you’ve borrowed, your rate, and your desired payoff time.
Since your payoff plan allows you to know when you’ll be debt-free and how much you’ll spend to get there, a personal loan can provide a lot more financial certainty than other borrowing methods like credit cards — and can be a lot cheaper.
Let’s say you had a credit card with a $5,000 balance and you made 2% monthly minimum payments on it. Your starting monthly payment would be $100, but payments would go down over time since the monthly payment equals a percentage of your (continually declining) balance. Unfortunately, your payments would mostly go toward covering the interest you owe, so you’d make very slow progress with debt payoff. In fact, it could end up taking more than 30 years to pay off your debt. During that time, you’d spend around $26,568 in interest.
By contrast, if you got a $5,000 personal loan at 12.17% with a five-year repayment timeline, you’d make a monthly payment of $112 the entire time you’re borrowing, would be debt-free in five years, and would pay a total of around $1,700 in interest over the life of the personal loan.
This predictability is a major advantage of personal loans. But you do need to make sure your payments are affordable. Before you take out a personal loan, compare rates and terms from several of the best personal loan lenders. You can do this online. Look at the rate, total borrowing costs, and payment time to make sure you’re borrowing enough and will easily be able to pay back what you owe.
If you do this, you’ll be able to find the right personal loan for your first borrowing experience.
Our team of independent experts pored over the fine print to find the select personal loans that offer competitive rates and low fees. Get started by reviewing our picks for the best personal loans.
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Hackers accessed the email addresses and names of everyone in the Okta customer support system. Find out what this means for your online security.
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Okta has notified users that the security breach it first announced last month was worse than it first thought. The company, which specializes in identity verification, initially estimated that less than 1% of customers had been affected. However, Chief Security Officer David Bradbury now says the hackers downloaded data from all Okta customer support system users.
The good news is that Okta says only names and email addresses were stolen, at least for 99.6% of impacted users. The bad news is that this is information criminals can and do use to access our accounts. Okta has over 18,000 customers worldwide, and works with big companies such as Zoom, T-Mobile, and Hewlett Packard.
Okta warns the breach could put users at a higher risk of phishing or social engineering attacks. Phishing is where criminals pose as organizations you trust, often via email, to trick you into sharing sensitive information or installing malware. Social engineering is also known as “human hacking” and can involve more complex hoaxes.
Whether or not you’re an Okta customer, cyber threats are on the rise. FBI data shows that people lost almost $190 million to identity theft in 2022. Sadly, there’s a trade-off for the convenience of online banking and using a host of shopping and budgeting apps: It’s easier for criminals to find ways to hack into your accounts.
Here are some ways you can protect yourself:
Set up multi-factor authentication (MFA): MFA is the backbone of Okta’s business. It adds an extra layer of security to your login — such as getting you to enter a code as well as your password. You might use an authenticator app or get an extra code sent to your phone.Know how to recognize phishing scams: Be suspicious when companies contact you out of the blue and ask for sensitive data, whether it’s by email, text message, or a phone call. Watch out for red flags such as slightly odd sender info, emails where your address isn’t in the “to” box, and language that doesn’t feel right.Use a different password for every account: It can be hard to keep track of your password info across multiple accounts. But using an easy-to-guess password or repeating the same password to access several sites can be dangerous. Consider a password manager or come up with your own system to generate strong and unique passwords.Keep your antivirus software up to date: Security software can help protect you against malware, spyware, and viruses. It can also alert you to suspicious emails and give you some protection online. Set up automatic updates to stay ahead of the latest threats.
Many bank accounts and credit cards provide some level of protection against fraud, but it’s still important to be vigilant. The harder you can make it for cyber criminals, the better.
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