A reader recently posed this question to Consumerism Commentary:

Are clothes a part of net worth?

In May, I wrote about how to calculate your net worth. Technically, your net worth includes the value of everything you own subtracted by everything you owe. Your wardrobe, shoes, furniture, coin collection, car(s) if you have one, house(s) if you have one or more, are all included in the own category, called “assets.” Your loans, mortgages, credit card balnces, and immediate tax liability if your assets are liquidated fall into the owe category, called “liabilities.”

Your teenage children, while most likely a burden, should not be considered liabilities nor assets — at least not in this country.

Now there’s probably little value in tracking the value of your clothing or shoes from month to month or year to year. Including them in your calculation doesn’t add much useful information if you’re just trying to track your financial progress. For a meaningful calculation, leave them out — but then don’t call your total at the bottom your “net worth,” at least not to other people. Call it whatever you want on your own, but the term, “net worth” has a singular definition among most people and can cause confusion if you use that term to describe your customized calculation.

This doesn’t answer the question of how to include your clothing in a net worth calculation. What you are trying to determine is the price you clothes would fetch if you had to sell them, which is likely an amount well shy of how much you paid. A best guess would probably suffice, and I would hope that this is a situation no one would have to face.

This reminds me, I should revise my future monthly financial reports just so it’s clear I have other assets and liabilities that I don’t include for my own purposes.

Here are some more articles from bloggers about the net worth calculation.

How to Calculate Your Net Worth, here at Consumerism Commentary. “Since the purpose of the calculation isn’t to compare yourself with others, it doesn’t matter what you choose to include as long as you’re consistent each month, and the numbers are meaningful to you.”

Considering Changes to How I Calculate Net Worth, at My Money Blog. “When tracking one’s net worth, whether publicly or privately, I don’t think there is any one “correct” way to do it. People should measure it however they like in order to achieve useful information out of it.”

What’s the Best Way to Calculate Net Worth?, at Free Money Finance. “Personally, I calculate my net worth including the value of my house. But I also know that it’s not a liquid asset that I could convert to cash quickly if I needed to.”

Net Worth vs. Net Investable Assets, at Five Cent Nickel. “I have to admit that I’ve never been a big fan of net worth in its purest form… That is, how much money you’d have if you liquidated all of your investment accounts, withdrew all of your funds from the bank, sold everything that you own that has any value whatsoever, paid off all your debts, and then threw the remainder in a giant pile.”

How to Calculate Your Net Worth, at The Simple Dollar. “Take your total assets and subtract from that your total debt. The resulting number is your net worth.”

Net Worth, Net Investable Assets, and Net Liquid Assets, at Analyzing Wealth. “All of your assets (cash, investments, property, etc.) minus all of your liabilities (loans, revolving debt, etc.). This is a great measurement because it paints the whole picture– how much MONEY do I have? If I sold it all and moved to South Dakota, how much would I be taking with me?”

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