Hey, Sean, what's your take on cosmetic procedures?

If it makes you happy, go for it. But be mindful of your budget and the risk of body dysmorphia. What about you, Sarah?

I am team. Never say never. It's your body. It's your face and your money. So if it would make you happy to do it, then do it. And if you don't ever want to do it and you're really opposed, that's okay, too.

Yeah. And maybe mind your business.

Yeah.

In this episode. Episode we're going skin deep into what it costs for some folks to keep feeling good about their appearance.

Welcome to Nerdwallet's Smart Money podcast. Our job today is to empower you to make smarter decisions with your money and answer your questions about how to manage it. I'm Sean Piles.

And I'm Sarah Rathner. So, Sean, what have we got on tap this episode?

Well, we're talking with a listener about net worth, what it's good for, what yours should be, and whether you should compare your net worth to those of your peers. But before that, let's touch on that whole cosmetic procedures thing that you mentioned at the top of the episode.

Sure.

Okay. Sarah, you recently wrote an article with the headline Forever Young, the cost of literally keeping your chin up. And first of all, congrats on writing such a great headline. I lulled when I read that. But I need to know what inspired you to write this piece.

It's probably one of the best headlines.

I've ever written, and I've been writing headlines for, like, 20 years.

So I am turning the big 40 this year, and I kind of start noticing some of the sun damage and other mistakes that you make in your younger years. When you reach this point. All those years not washing my makeup off before going to bed, I know it's not a good thing. Wash your face.

You're thinking about maybe putting some money into that?

Well, it got me thinking about how now the millennial generation is hitting an age where they might be interested in pursuing something a little bit deeper than moisturizer when caring for their skin, because they're starting to notice some stuff that maybe isn't making them happy when they look in the mirror. And for me, it's not to come at a place of judgment or to tell you, well, you're hitting 40. You have to do this, this, and that. No, you don't. Aging is a beautiful gift.

Yes.

Every gray hair, every smile line, every frown line, that all comes from somewhere in your life, and it deserves to be celebrated in any way that you want to celebrate it, even if it means covering it up temporarily. So ultimately, it is your decision whether or not you want to pursue any sort of anti aging treatment or procedure or product. But if you do want to pursue that, then let's look at this from a financial standpoint, because it can get very expensive and it can become a large part of your self care budget.

And we should say that on smart money, we are very antiaginism. I think what you just said about age being a gift, growing older being a gift is very true. Even though I am a very youthful 32 years old, I have a number of gray hairs, and I wear them like a badge of honor. But that said, we are products of the society that we live in, and our society cherishes youth, or at least the appearance of it. And keeping up that youthful appearance can be very expensive. So, Sarah, when you were reporting this piece, what did you find as the general price range folks hoping to look young can expect to pay?

Well, according to data from the American Society of Plastic Surgeons, the current average cost of botulinum toxin injections, that includes brands you've probably heard of, like Botox, Dysport and Juveau, and a few others that are available in the United States. That's $528 for a treatment that's, on average, another popular treatment, dermal fillers. You might have seen juvederm ultra voluma restalin. Those start at an average of $794. And then another popular treatment for people in their 30s, early 40s is laser skin resurfacing. There are a number of different laser types. So, again, talk to your doctor about that. That's often used for things like acne Scarring and sun damage. Those cost an average of $1,489.

Okay, that's a lot, a lot of money.

Yeah.

And all of these things are ongoing. This is not a one and done situation. In order to keep up the effect over time, you do need to continue to do things. Laser surfacing is probably the least often. That could be up to maybe once a year. Sometimes you might do three treatments in a row and then let it rest for a while. Dermal fillers, also, depending on what you're seeking, could be one or two times a year. Botulism, toxin injections, like botox, that could be quarterly, but also depending your mileage may vary.

Yeah.

So this is an ongoing cost.

It's a very significant investment. And I'm guessing there are a lot of people who hear these numbers and kind of bulk at that. And they're wondering, is there a more affordable way to get this sort of youthful appearance? And in your article, you point out that preventative care can be some of the easiest and most cost effective ways of holding on to your youth. So what does that entail?

Yeah, so anybody who's like, 25 and listening to this podcast, listen up.

This is the moment you turn the volume up.

Okay. Sunscreen.

Wear it every day.

SPF 30 or higher. That is one of the main ways to prevent future damage to your skin. In addition to scary things like skin cancer. Don't sit out in the sun, or, God forbid, go to a tanning bed. That's number one. That is the foundation of preventative skincare, according to all the dermatologists I spoke to to write this article. Another thing you can look into are just topical serums and lotions. You can buy some very well regarded ones at the drugstore, or you could get medical grade, quote unquote, skincare at your dermatologist's office. That's often a significantly higher cost. There are options at a variety of price points. You might have heard of something called retinol. That's apparently it's like a vitamin a concentrate that helps with cell turnover on your skin. So that can help unveil fresher skin. Vitamin C serums and other antioxidant serums that could be used in conjunction with your sunscreen to boost protection on your skin. What you can do is if you work with a dermatologist that you really like, you can bring your products to them at a future appointment and go over your skincare regimen with them, and they can make recommendations.

And one thing I wanted to mention is that you just listed a number of different products, and the price range of these items can vary greatly. You could get a thing of sunscreen at the pharmacy for maybe $10, but then there are others that are upwards of 30, maybe even $40, depending on how much you want to spend and what you're getting from the product. And that also can be a little bit intimidating if people are new to this and they're trying to figure out, hey, I just want to wear sunscreen so I don't look old, and I can avoid getting skin cancer. Just start with something easy. Try it out. See how your skin responds to it before jumping in and getting the most expensive, fancy thing on the market, because you might not need that sort of intense product.

Yeah.

And some of these products can also irritate your skin, like retinol. So that's why you want to work with a dermatologist, because as you might have reactions to these products as you try them, then it could be nice to have somebody in your corner who could help you figure out a different way to approach your skincare regimen in a way that hopefully is less irritating to your skin. There are also times where you might be using two products that actually cancel each other out, which is why it's a really great time to talk to your dermatologist to make sure you're not inadvertently doing that and then wasting your money. There are also times where there are certain skincare ingredients that you don't want to use. For example, no retinol while you're pregnant. If that's something that you're in the life phase of many millennials are, you do want to tailor your skincare regimen around certain times in your life where you can't use those ingredients.

And I really do want to emphasize again the importance of going slow with things like this, both to save your skin and to save your wallet. I say this as someone who has sensitive skin and has spent too much on products where I was like, oh, this is going to be great and it's going to help everything. But there can be a temptation sometimes with something particularly like skincare where you think, if I buy this $50 tube of snail mucin, then it's going to fix every problem that I've ever had in my life, and I'll look dewy and glowy and gorgeous, and it might actually result in you having a horrible breakout. And then you feel bad about yourself. You're out all this money and you're feeling quite stressed. So go slow. Take it easy. Don't buy into all of the hype that you might see on TikTok about a specific product and do what's best for.

Yes.

Yeah, we talk a lot about financial influencers on social media. Let's talk about skincare influencers. A lot of them are being paid to promote products to you that may or may not work for your skin. So again, talk to an expert who is actually treating your unique situation, because they can make recommendations that work for you, and you will probably end up spending less money. Or at least if you are spending a lot of money, it'll be on things that will more likely work for you.

Well, let's turn to a couple of other areas of preventative care that you mentioned in your article, and one is not smoking and not drinking. Those will help you keep looking young, and they also have the added benefit of helping you not feel like a dried up corn husk after a night out, so that's great.

Yeah.

No vaping either, by the way.

Yeah, not good for you. Are there any other sort of preventative actions that people can take that don't cost them money?

Don't spend time out in the sun during peak sunlight hours. Staying indoors could be free, I guess, depending on what you're doing when you're indoors. If you sleep on your back, you're less likely to cause wrinkles on your skin because you're not smooshing your face against your pillow. So if you wanted to retrain your sleeping habits and give up side sleeping or stomach sleeping, sleeping on your back over time can eliminate one reason people get wrinkles on their face. Or you could just sleep however you want because sleep is delicious.

There is something so deeply satisfying about being fully smushed into the pillow like that, and I'm not willing to give.

That same, same no.

Well. So, Sarah, what is the bottom line for those who want to take care of their faces but not spend an arm and a leg?

Well, start with the preventative. You know, the earlier you can start it, the better. It's like saving for retirement. Start young and over time you will see benefits. You'll see better skin quality over time because you have worn sunscreen, stayed out of the sun, quit smoking, all of those things. And then if you think you might want to pursue cosmetic dermatology or plastic surgery in the future to correct any sort of issues that you have, begin saving up, have a budget, have maybe a high yield savings account for self care, save a little bit over time, and that way, when you're ready to actually interview a couple of providers and pick the right one for you, you'll have the money available to pay for these procedures and not go into debt.

All right, solid advice. Well, I think we are about ready to move on to this episode's money question segment. But first, listener, a question for you. What is your money question?

Do you need help figuring out your new budget for 2024 or figuring out your spring travel plans or how much you want to spend on Botox? Whatever money question you have, we nerds are here to help you answer them.

You can text your question or leave a voicemail on the nerd hotline at 917-30-6373 that's 91730 nerd. Or you can email your question to podcast@nerdwallet.com before we move on, listener, I have an exciting announcement. We are running a book giveaway sweepstakes ahead of our next nerdy book club episode next month. We're speaking with Ashley Feinstein Gersley, author of the 30 Day Money Cleanse, which is about exactly what it sounds like. To enter. For a chance to win our book giveaway, send an email to podcast@nerdwallet.com with the subject book sweepstakes. During the sweepstakes period, entries must be received by 11:59 p.m. Pacific time on February 29. Include the following information, your first and last name, email address, zip code, and phone number. For more information, please visit our official Sweepstakes rules page. And one last thing. If you find the show helpful, please take a minute to write a review. Reviews help us reach more people, which means everyone else is getting smarter about their money. And we can live in a world where people are all making good decisions about their finances. So please take a minute to write a review. We really appreciate it.

And now let's get on to this episode's money question segment. This episode we're talking with a listener, Charlene, who's 29 and lives in Texas. We're going to talk with Charlene about net worth, what it's good for, what it's not good for, and how much you should compare yours to those of your peers. Charlene, welcome to smart money.

Hi. How's it going?

It's great. I'm so happy to have you on. Before we get into the conversation, I want to just say on behalf of our legal team that we are not financial advisors. We're not going to give you direct financial advice. This is just to talk about your financial circumstances for general educational and entertainment purposes. So with that out of the way, Charlene, can you tell us about your financial life right now? Like what you do for work, how much you're able to save, current money, goals, all of that fun stuff?

Sure. So I am currently working as an environmental, health and safety manager, and I'm currently able to save about over, I think, half of my biweekly paycheck and a lot of my financial goals. I'm thinking a lot about financial independence and ways that I can generate more passive income and also really want to see how I'm doing on the track to retirement.

So when you say you're saving about half of your income, first of all, congratulations. That's really impressive.

Thank you.

Do you mean that you're putting that into a savings account? Are you investing that? In what way are you saving it?

So I have some in my 401 that I put aside. I also have some deductions for my employee stock purchase plan with my employer, I put about 15% into that, and then I have another 10% or so going into just like, high yield savings for emergency funds.

Great. That seems like a pretty solid balance.

Yeah. I am impressed. Yeah. So what got you thinking about your net worth and how it compares to your peers, to other people similar ages to you?

A lot of the times they say, like, comparison is not really great, but I always just wonder, am I on the right track? Because I did do some home remodeling in the past two years that I moved to Texas when I bought my house. And so I did take some of my retirement contributions. I reduced them. I used to do 20% when I was in California, and now I've scaled it back because I had to pay for some wedding expenses as well. So I wondered if those things kind of put me off track. And with a lot of the talks about the economy, recession and such, it just made me wonder, am I on the right track? How is my net worth now that I'm getting closer to 30, the age, the number seems to be getting bigger and bigger.

Yeah. You describing how you were saving more for retirement and then you pulled back a little bit reminds me of something that Sarah has talked about, which was advice she got early on in her career, which was to save as much as you can for as long as you can, because things will happen in life. You will have a wedding to fund, a home to remodel, maybe a kid to have one day. All of those things are going to be expensive, and they might mean that you can't contribute as much toward a 401. But in general, it's great to take advantage of those times where you have fewer expenses to funnel money toward retirement savings because you're still pretty young, you have the great fortune of time ahead of you and compound interest that can make it so that a little bit that you contribute now will add up to a lot later down the road.

Yeah. I kind of think about life in seasons, and no season is permanent, but the season of your life when you're younger and you are less likely to have done super expensive life stuff like buy a home and fix it up, have a wedding, have children, have pretty serious medical expenses. And these things can happen to people at a variety of ages, but generally, the younger you are, the less likely that is to have all happened to you. That means that season of life is one where you can, if you're able, set aside money, because later on in life, things get a little bit more complicated. But that's also not forever. Like you're not going to be paying college tuition forever for your children, you're not going to be paying a mortgage forever. These things all have deadlines, so it's just acknowledging where you are in life and saving while the saving is good. And then sometimes you're in a phase where things just get more expensive and that's what you save for, for sure.

Charlene, I know that you're curious about kind of average net worth by age. So what specifically are you curious about in that regard?

I'm just curious. I think a lot of times I did a quick Google search and there was a chart, it was like this age bracket and then this is how much you should have saved in your 401K. But it doesn't really talk about net worth. But maybe people don't even consider that as part of their thinking. Maybe they just think more about the balance in the 401K.

Yeah, well, for a lot of people, their net worth is made of that balance. In the mentioned the word should, how much someone should have. And there are a lot of benchmarks around that which we can get into in a little bit. But I tend to bristle at the word should because everyone's circumstances are so different. And if you look at what a financial advisor might tell you you should be doing, it might not be realistic for your current goals or finances. So that can be discouraging if you're not in that place where you should be able to meet these things that you should be doing. But we'll get to that in a bit. But I do want to talk about net worth at kind of a high level because some folks may not be fully aware of what it really is and how you can use it. So net worth in general is great for just giving you a financial snapshot of where you stand right now because your net worth tells you how your assets compare to your liabilities. It accounts for things like your student loan balance, the equity that you have in your house, a car loan that you might have a retirement account balance, and so much more.

Because really simply it's just a measure of how what you owe compares to what you own. And so if your net worth is positive, you have more assets than liabilities. If it's negative, then it's just the opposite. And it's really not uncommon for people who are in their twenty s and early thirty s to have negative net worths. And that doesn't mean that someone who's in the situation is a financial failure, it just is where they are. At that current moment, it's a useful gage for progress on goals like paying down debt or building up a retirement nest egg. But early on in life, it's, again, really not uncommon to have a low or negative net worth.

Okay. Yeah, that makes sense.

Yeah. And a net worth number is a moment in time. And what it doesn't mean, necessarily, is that someone has, quote unquote, made it compared to their peers. Because you could have a high net worth because you have an asset like a house that's gone up in value significantly, which has been true for quite a few people recently. But day to day, your cash flow might be pretty tight. So you're not really living large. You just might have a house that is worth a lot of money. And so using your net worth as a basis for self esteem or your worth, or how much you're worth in comparison to your friends or family members is just an exercise in futility.

Definitely.

I want to go in on comparing net worth averages, and we'll talk about some medians as well, because you mentioned that you maybe saw a chart that had benchmarks of how much someone had saved or what their net worth might have been. We actually have a great page on Nerdwallet that allows you to compare net worth by age, average net worth by age. And one thing that's talked about in this article is that average can be really misleading, because the average net worth for folks under 35 is $183,500. But the median, which is just the middle point between the top and the bottom, is $39,000. So really stark difference. And that's because we have extremes at either end. So median can be a little bit more representative of what's more common for folks than an average in this situation.

Yeah, I mean, that definitely gives me a greater idea. And you're probably right. Everyone's circumstances are different, and also location, too. When I lived in Bay Area, a lot of the employees that I would see and talk to, their numbers kind of, like, blew my mind when I first moved to Bay Area. And then later when I would go home and see friends and family and just kind of hearing their stories, I realized they would not understand the community that the Bay Area people are working in because those salaries they could not even fathom.

Yeah, I mean, I lived in San Francisco for a period of time as well, and people talk about their net worth all the time, in part because they have so much money coming in. And that can really lead you to this comparison of how much you have or don't have, which can leave you feeling kind of bad if you don't have as much as someone who is like a tech multimillionaire. But for a lot of people, as long as you are doing the best that you can and working toward your financial goals, that's more important than a number on a balance sheet, which is going to change over time. So that's something that I had to work through in my 20s as well. And I was talking with a lot of friends who went to prestigious schools in the Bay Area and they would be worried that, oh, I don't have this career that my colleague had or my classmate had, and they would get hung up on that. And then what I would always try to tell them is like, look, this is where you are right now. You will probably have a very different trajectory and even a few years and you don't know where that classmate might end up.

So just focus on what you can do for your situation and your circumstances to get you where you want to go. And don't get too hung up on what someone else is doing because doesn't really affect you all that much, right?

Yeah, I definitely agree.

You sent us a couple of other questions. What do you say we get to them?

Sure.

So, Charlene, your first question to us.

Had to do with optimizing savings in order to increase net worth. So what is it that you want to know about that?

Should I be directing a lot of my savings into 401? There were some people online that I was reading about, and they said 401K is not necessarily the best vehicle for retirement, that they should tell people to diversify their investments and look into more stock based instead of just a regular 401K because it grows not as well as some other stocks.

So again, we are not wealth managers here. But what I will say is what's interesting about some of the guidance you've been hearing about 401 ks is it seems that people are misunderstanding what a 401K is because a 401K is merely an investing account that can hold not only cash, but also investments in many forms, whether that's index or mutual funds or individual stocks or bonds. So you can invest within your way that is in line with your own goals and your own risk tolerance, and also what's available to invest in. And that can depend on what your employer provides as options. So that can vary. But what you can invest in in a 401K versus a taxable brokerage account that's not connected to an employer or even an IRA that's not connected to your employer, you're going to see some overlap so it really comes down to how you want to invest and what you do within those accounts. And so I would just caution people to not think of a 401K as investing. It's what you do with it. That's the investing.

And I think sometimes when it comes to diversification in a retirement account, people can sometimes conflate investment diversification in terms of like an index fund or an annuity or whatever, with diversification from a tax perspective. And so with a money that you're putting into that is pretax, you are not being taxed on it now. But when you make withdrawals, there will be a tax that you have to pay on that. And that is in contrast to something like a Roth IRA, where the money that you put in is post tax, like it's money that's already in your debit account, for example. Then you're transferring that to this IRA, and then when you make those withdrawals, it will not be taxed. So that is where diversification can be really important from a retirement perspective, is how you're being taxed. So does that make sense, Charlene, the tax differences between those?

Okay, yep, definitely.

Yeah. And so obviously there's optimizing your investing and being thoughtful about your investing is one side of the coin, and then spending less is the other side of the coin. You mentioned saving a pretty high percentage of your income, and you talked about financial independence or the fire movement, financial independent, retire early. And people who follow this movement are really hardcore about building their net worths and their retirement savings by aggressively saving their income. So, Charlene, this is a question for you. Why do you feel called to this? Why does this appeal to you, this idea of attaining financial independence by saving very aggressively?

Obviously, I don't know if anyone will recognize my voice from this podcast, but I just feel like life is not meant to be working, like the entire life. I'm just kind of really tired and I'm looking for a way to maybe retire earlier and so that I don't have to spend my time working for someone and just kind of be able to do the things that I enjoy in life and be with my family and my friends, obviously knowing that it takes time to get there. But if I can work hard earlier in my life, then maybe I can enjoy the remaining years of my life with my family earlier and also to help out my family because they're not in as fortunate situation as I am with my husband. And so I want to be able to also share some of my good finances and early retirement with them.

Have you and your husband talked about what you envision your life like when you do retire? If you're able to retire early?

We thought about traveling to some places because, honestly, in all the years that I've been working, I haven't really taken a lot of time off. And with COVID as well, we just want to be able to travel a lot. There's a lot of places that we want to visit, so that's top of our list.

Yeah. So do you make a lot of sacrifices in your day to day spending and savings so that you can funnel more toward retirement savings or general savings? I've talked with folks in the past who are in the fire movement, and they're using, like, an iPhone six and their car is from 1997. Are you living any of that type of lifestyle?

I have not changed my phone in almost three years. And before that, I had an iPhone seven for almost, like, five years, something like that. And so I tried really hard not to upgrade every iPhone model that comes out.

Yeah. So you're being frugal in ways that you can.

Yeah. And I did switch out my car. I had to because the AC was not working anymore, and in the Texas heat, it was very unbearable.

You need. Yeah.

So I did get a new car, but I did put down a good amount of down payment, and so I'm not as concerned about the monthly payment because my previous car was paid off. So I used all of that money that I sold to partially pay for the new car, and then just usual, like meal prepping at home, avoiding buying lunches, making my own coffee, things like that.

All right, well, I know you were also wondering about how to know if you're saving enough for retirement. So I did want to mention a couple of benchmarks. A common one is that you should, in air quotes here, have around one times your salary in a retirement account at age 30. Around age 30. And then by the time you reach your mid 40s, that jumps to around three to four times your salary. But this is assuming that you'll retire in your mid 60s ish and then have 30 years to live off of that retirement nest egg. If you retire early and join the fire movement, the calculation is totally different. And also, for many people, trying to save one times your salary when you're working 40 hours a week and still planning to retire around 65 isn't realistic. But saving for retirement isn't an all or nothing game. Like, if you're not at one times your salary at 30, less is fine. Saving between 10% and 13% of your salary earlier on in your career is a pretty solid goal that a lot of financial advisors will recommend to get you to a place where you have a built up nest egg by your mid 60s.

But again, it seems like you might be on a different path.

Yeah, I'm trying to really save as much as I can and so that I'm not as worried later or feel like I don't have a sense of security.

So have you looked into how much you might need to save ahead of a potential early retirement, or even just regular old retirement?

On fidelity, they have this little exercise that you can move some buttons around to see if your contributions are keeping you on track for a retirement. And currently it says because I'm at 10% that I still need to contribute a little bit more in order to hit the goal. And so I think if I bump my contribution back up to 20%, it said that I'll be able to reach and exceed my goal at like 35 or something like that. Like double what I have.

Yeah. And a quick note about fidelity. They are a nerd wallet partner, but that doesn't affect the way that we talk about them. There are some calculations that you can do as well to try to see how much you might need in retirement. One way to do this is to look at your monthly expenses now, and then you can multiply that to get annual expenses. And this is things like housing costs, car payment, electricity. You might want to throw in some restaurant meals in there just so that you're not living off of canned beans in retirement. And then once you have your annual expense, multiply that by how many years you anticipate being retired. For a lot of folks, it's going to be 30 to 35 years. You might have more years of that, and that's a pretty rough estimate of how much money you may need to save for retirement. I'll also say that if you don't want to do that math, nerd wallet has a really handy calculator that will do this for you, and it has a very visually appealing graph that compares where you are and where you will need to be to meet your goals.

I, ahead of this recording, spent way too much time playing around with that because it's so fun to see how much contributing, even a little bit more each month can pay off down the road. But another thing to consider is Social Security too, because you'll likely qualify for some kind of benefit from that. But figuring out how much you'll get can be challenging. We also have a calculator at Nerdwall that can tell you or give you an estimate of the benefits that you'll receive.

Okay. Yeah, I'll definitely check it out.

Yeah.

So another thing that you could use.

Just sort of as a template, is that oftentimes people will live off of between 60% to 80% of their pre retirement income. So if you wanted to forego the calculator, although they are really fun to play with, you could use that number as a starting point, because some expenses become lower in retirement, especially as you head into your beyond. So maybe you're at a point in life where your house has been paid off. You're no longer putting kids through school. If you retire earlier, maybe those things are not true for you yet. But something also to keep in mind for retirement as you get older is medical expenses can become significantly higher, especially as you need more medical assistance, possibly home health aids, things like that. And so hopefully you have a long and healthy retirement. But as people get older, they do need more help, and that help costs.

A lot of money for sure.

So I want to circle back to net worth and how to use it for you as a gage for your goals and what you want out of retirement, whether it's early or on a more typical time frame. How do you think you'll be using this metric? As you talk with your partner and begin to make more solid plans for.

Your future, we'll look at what our goals are in the next 510 years, 1520 years, and kind of see, are there any more life changes happening? Maybe some medical expenses come up, like you mentioned, that might require us to reassess our financial situation. I think it'll give me a gage of do I need to change up my strategy of how I contribute to retirement or even pull some money out of any other investment accounts, because I also have my etrade account. So if I decide to maybe invest in something else, that might help me understand where my journey is when I reassess my net worth years down the road.

Yeah. I would also recommend looking into some of the fire communities online. There are a handful on Reddit. There's like fat fire, where people are in the fire movement, but they're still enjoying their day to day life, not living off of canned beans, that kind of thing. And these communities can be tremendous resources as you figure out what sort of retirement you might want to work toward and how you might be able to gage your net worth in comparison to that. Because the hard part about saving for retirement is that we've never done this before, and we really only have one shot to do it. So to the extent that you can learn from other people who are going through this or maybe further down this journey than you are, the easier I think it'll be for you as well.

Definitely.

Well, today I learned that Sean's biggest fear is having to live off of canned beans.

I like canned beans. Okay. But they need to be within another kind of recipe.

Yeah, you can't have too much of a good thing.

When I say canned beans, I imagine myself over a fire in the middle of the desert, like, trying to open up this old can of beans, and that's all I've got to my name.

With, like a pocket knife.

Yeah, exactly. Is there anything else on your end, Charlene, that you wanted to ask us about?

So, what does net worth mean? What is included in the definition of net worth? And does the definition of net worth differ from coast to coast or different people?

So your net worth is basically your assets, which means the things that you own. So that could be cash, it could be a home, it could be artwork, it could be jewelry, it could be a car, and then it could also be your investing accounts, and then it's also a listing of what you owe. So your debts, mortgage, student loan, car loan, personal loan, those sorts of things. And you subtract the debts from the assets in terms of the value of the assets minus the value of the debts, and that's your net worth. I don't know if the definition of net worth changes geographically, but the variations you see might be what people choose to include in their net worth. Sometimes people include the fair market value of their car, sometimes they don't. Things like that. It just kind of comes down to what you decide to include and maybe what free template you download online to input numbers into. And there are lots of free templates available.

Yeah. That makes a lot more sense.

Yeah. Sean, do you have any thoughts on net worth and its various forms?

That's the gist of it. Again. It's like, for someone in your late 20s, really not uncommon to have a net worth that could be zero or negative. But over time, as you pay down debts, you have a house, so you'll be paying down that mortgage. Your net worth will begin to go up. And ideally, when you are in retirement, your net worth will be fairly high, so you don't have a lot of debt obligations that you're paying off when you're in retirement.

That makes sense.

Well, Charlene, thank you so much for coming on and talking with us.

Thank you for having me. Really appreciate your answers.

Yep, please keep us posted on any changes that you and your husband decide to make around net worth and saving for retirement. We'll do, and that's all we have for this episode. If you have a money question of your own, turn to the nerds and call or text us your questions at 917-30-6373 that's 91730 nerd. You can also email us at podcast@nerdwallet.com also visit nerdwallet.com podcast for more info on this episode. And remember to follow, rate and review us wherever you're getting this podcast. This episode was produced by Sarah Rathner and me with help from Tess Vigland, Sarah Brink, and Kevin Tidmarsh mixed our audio and a big thank you to Nerdwallet's editors for all their help.

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