What is Your Net Worth, and Why Should You Care? Steve Knudson Quoted

One of Intermountain Financial Group’s financial advisors , Steve Knudson, was quoted in the article, “What is Your Net Worth, and Why Should You Care?”

You probably know how much you make each year, and maybe even what you spend each month, but do you know your net worth? And more importantly, how to use the information in a way that matters?

Knowing your net worth can have a significant impact on your budgeting, spending, and retirement plans.

What is net worth?

Simply put, net worth is everything you own minus what you owe. While online calculators can be used to run the actual numbers, it’s important that you determine assets from debts accurately, to arrive at the most accurate breakdown.

Create a personal balance sheet with two categories: What you own (assets), and what you owe (liabilities). The “owned” category should include checking, savings, certificates of deposit, investment and brokerage accounts, retirement and college savings plans, and the value of vehicles you own outright (which can be found using Kelley Blue Book).

If you own furniture, electronics, art, technology, or jewelry worth significant value, those items are assets, as is the equity (what you own) in your home or investment property. (It is not the market value of your home — unless you own it outright).

Conversely, the “owed” category should include the balance you owe on your mortgage loan, student loan debt, auto loans, credit card bills, taxes owed, alimony or child support, and lease obligations you may be bound to for a car or rented dwelling.

Though actual calculation of net worth is simply subtracting what is owned from owed, it’s imperative that your balance sheet “inputs” are accurate.

Financial expert Steve Knudson of Intermountain Financial Group says that relying too heavily on net worth becomes problematic when based on unrealistic projections of unpredictable forces.

For example, if you’re invested in stock markets and the economy is booming, so is your net worth. Market values plunge one day — your net worth goes with it. An overstated net worth analysis can lead to borrowing things you can’t actually afford, and underestimating what you need to put aside for retirement.

“I have seen far too many portfolios trashed due to over aggressive valuations on real estate and private company stock valuations that have never materialized,” Knudson says.

Here are three simple ways to put your net worth balance sheet into action:

See where you stand with retirement

Forbes contributor and financial adviser David John Marotta, president of Marotta Wealth Management, says that saving 15% of your take home pay each year throughout your working life should theoretically provide sufficient savings for retirement, even with the ebb and flow of the market. Obviously, the exact number that percentage amounts to will change with your salary throughout the years.

Using your net worth balance sheet, you can easily arrive at a very basic spot check of how well you’ve planned for retirement so far.

Let’s suppose you started contributing to retirement five years ago, and your annual take home pay has been $40,000 for that time. Sticking to basic math, you should have about $30,000 earmarked in a retirement account. Of course, you may have more, or less, based on the investments you’ve made and employer matches, but the 15% rule is a simple way to see where you currently stand. If you’ve fallen short, you’ve got some catching up to do, either by spending less, saving more — or a combination of both.

Start a debt elimination strategy

Retirement planning is about strategizing a way to live in an essentially income-less scenario, aside from what you’ve saved. Ideally the “owed” section in your net worth balance sheet will be blank when you retire — even if that’s far from your reality today.

The steps you take now to eliminate debt can be just as important as what you contribute into retirement savings, particularly if the debts you carry have you paying far higher interest rates than your investments earn.

Using your “owed” column, formulate an action plan for long-term debt elimination that will allow you to eventually enter into retirement debt-free. Start with the highest interest rate loans first, and work your way down. As you whittle loans away, you’ll free up more funds to build liquid assets, and invest for retirement.

Focus on long-term planning

Knudson suggests a triangle-style approach to net worth analysis that focuses on three critical aspects of long-term financial management: income, access and growth.

To determine income needs, calculate your monthly fixed expenses compared to your monthly cash flow. If monthly income sufficiently covers those costs, Knudson says “there is no need to “burden an investment portfolio with bonds or low performing investments.”

To evaluate access, add up the total of your “owned” assets that are completely liquid, meaning that if a financial emergency happened tomorrow, you could withdraw your money without paying fees or penalties, or selling assets that may or not be worth peak value.

If most of your “owned” column consists of property, stocks, bonds or mutual funds, consider shifting some assets into more liquid savings tools to protect your long-term financial affairs. Once you’ve determined income and access, Knudson suggests investing the balance of cash in a long term growth portfolio to hedge against inflation, provide for appreciation, and invest for opportunities.

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INTERMOUNTAIN FINANCIAL GROUP/MASSMUTUAL RECOGNIZED FOR EXEMPLARY WORKPLACE PRACTICES

Local Agency Receives Prestigious Alfred P. Sloan Award for Business Excellence in Workplace Flexibility

 SALT LAKE CITY, UT—Intermountain Financial Group/MassMutual, the Utah General Agency of Massachusetts Mutual Life Insurance Company (MassMutual), has been honored with the 2011 Alfred P. Sloan Award for Business Excellence in Workplace Flexibility for its use of flexibility as an effective workplace strategy to increase business and employee success.

This prestigious award, part of the national When Work Works project, recognizes employers of all sizes and types in the State of Utah and across the country.

“We are flattered to receive this national award, and hope to continue strengthening the bond between the company and our employees. We recognize that having a strong and healthy work/life balance is the key to anyone’s success,” Amber Dixon, Marketing Director said. “Our internal customers help make us successful, and we work hard to keep up the positive work environment to continue developing strong relationships with our employees, their families, and the community”.

Workplace flexibility—such as flextime, part-time work and compressed workweeks—has been demonstrated to help businesses remain competitive while also benefiting employees as well.

“Our research consistently finds that employees in effective and flexible workplaces have greater engagement on the job and greater desire to stay with their organization. In addition, they report lower stress levels and better overall health,” states Ellen Galinsky, president of Families and Work Institute (FWI), a research think tank on workforce and workplace trends that administers the awards.

The Sloan Awards are unique for their rigorous, two-step selection process, which involves an evaluation of employers’ flexibility programs and practices, and a confidential employee survey. All applicants are measured against national norms from FWI’s National Study of Employers.

“As a recipient of the 2011 Sloan Award, Intermountain Financial Group/MassMutual ranks in the top 20% of employers nationally in terms of its programs, policies and culture for creating an effective and flexible workplace,” states Galinsky. “In addition, what makes this honor so special is that their employees have corroborated this, affirming that it is indeed an effective and flexible workplace.”

Intermountain Financial Group/MassMutual will be recognized as a 2011 Sloan Award recipient at an upcoming event hosted by the Salt Lake Chamber. For details please contact 801-328-5048.

When Work Works is a national project to educate the business community on the value of workplace flexibility by sharing research and promising practices, and conducting the annual Sloan Awards. It is an ongoing initiative of Families and Work Institute first funded by the Alfred P. Sloan Foundation. In 2011, the Society for Human Resource Management and FWI formed a ground-breaking, multi-year partnership to grow When Work Works and help businesses become more successful by transforming the way they view and adopt effective and flexible workplaces.

For more information about the When Work Works project and the Alfred P. Sloan Awards for Business Excellence in Workplace Flexibility, visit www.whenworkworks.org.

ABOUT INTERMOUNTAIN FINANCIAL GROUP/MASSMUTUAL

For more than 157 years, local residents and businesses rely on Intermountain Financial Group (http://www.intermountainfinancialgroup.com) to help them secure their financial futures. The company significantly impacts Utah’s economy as seen in the numbers below (as of December, 2010):

  • More than 14,000 policyholders and clients1
  • Managing over $711 million in assets2
  • Over $3.9 billion in life insurance coverage in force3
  • Over $28 million of life insurance benefits (claims) paid4
  • More than $8 million in dividends to whole life policyholders5

The company has been in awarded the national Sloan When Work Works award in 2011, 2010, 2009 and 2008, as well as the Work/Life Award by the Utah Department of Workforce Services in 2010, 2008 and 2007 naming them one of Utah’s best places to work. The company currently has offices in Salt Lake City, Utah and St. George, Utah.

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*Securities and investment advisory services offered through qualified registered representatives of MML Investors Services, LLC. member SIPC.  (Salt Lake City Agency – 6340 S. 3000 E., Suite 500, SLC, UT  84121 – (801) 943-6277)

MassMutual Financial Group is a marketing name for Massachusetts Mutual Life Insurance Company (MassMutual) and its affiliated companies and sales representatives.

Insurance offered through MassMutual and other fine companies.

  1. 1.            An insured, owner, or payer of a MassMutual policy or contract.
  2. 2.            Includes values of MassMutual and subsidiary insurance companies’ insurance and retirement products and investment products offered through MML Investors Services, LLC, a MassMutual subsidiary.
  3. 3.            Amount of individual life insurance in force as of 12/31/10 related to products issued by Massachusetts Mutual Life Insurance Company and its subsidiaries, C.M. Life Insurance Company and MML Bay State Life Insurance Company.
  4. 4.            Amount of individual life insurance claims paid from 1/1/10 to 12/31/10 related to products issued by Massachusetts Mutual Life Insurance Company and its subsidiaries, C.M. Life Insurance Company and MML Bay State Life Insurance Company.
  5. 5.            The amount of dividends to whole life policyholders in 2010.

 

ABOUT WHEN WORK WORKS

When Work Works is a leading national initiative to help businesses of all sizes and types become more successful by transforming the way they view and adopt effective and flexible workplaces. When Work Works is one of the foremost providers of rigorous research and employer best practices on workplace effectiveness and flexibility in the nation, and administers the prestigious Alfred P. Sloan Awards for Business Excellence in Workplace Flexibility annually, which recognize exemplary employers for using flexibility as an effective workplace strategy to increase business and employee success. www.whenworkworks.org @FWInews

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New Financial Advisor Hired to Assist People and Businesses Plan for Now and the Future

Intermountain Financial Group (http://www.intermountainfinancialgroup.com), the Utah Agency of Massachusetts Mutual Life Insurance Company (MassMutual), has hired Keith Larsen as a financial services advisor and managing associate.

Larsen helps individuals, families, and small business owners with their life insurance and investment needs while supporting the client’s goals for a more secure future. Larsen also assists in the recruiting and mentoring of new agents for the company.

Larsen has 10 years of industry experience as a financial representative with a local financial services firm. Larsen earned his BS degree at Brigham Young University where he majored in Economics. “The financial services sector has always been an exciting industry for me to work,” says Larsen. “I enjoy my career specializing in life insurance. I am able to work with individuals and companies become more educated and prepared for their financial future.”

 

About the Company:
For more than a century, the Intermountain Financial Group/MassMutual (IFG) www.intermountainfinancialgroup.com has provided a comprehensive offering of a diverse array of products, including life insurance, annuities, disability income insurance, long-term care insurance, retirement planning products, mutual funds, and access to money management to individuals and businesses in Utah and most of United States. IFG currently has offices in Salt Lake City, Provo, and St. George, Utah. IFG has also been recognized as one of the best places to work in Utah by the Work/Life Awards Committee for 2007 and 2008 and the national Sloan When Work Works award in 2009 and 2008.

 

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*Securities and investment advisory services offered through qualified registered representatives of MML Investors Services, Inc. member SIPC.  (Salt Lake City Agency – 6340 S. 3000 E., Suite 500, SLC, UT  84121 – (801) 943-6277)

MassMutual Financial Group is a marketing name for Massachusetts Mutual Life Insurance Company (MassMutual) and its affiliated companies and sales representatives.

Insurance offered through MassMutual and other fine companies.