We have a pretty high net worth considering our ages and our only moderately high earnings (we briefly hit the top quintile of earnings before my husband started school, but two promotions, a nice bonus, and rental property later and we're not quite back). Although I would like to say this net worth is driven by high earnings, frugal living and smart investing that would mostly be a lie. Both my husband and I received free college educations thanks to wealthy older relatives (who hate that I tell people this because they are also humble- I have a lot to learn from them). Additionally, we received a small inheritance (from my husband's recently deceased grandparents) that enabled us to accelerate a lot our investing plans.
At our most recent budget meeting, we realized that nearly 10% of our net worth was in cash vehicles. This includes an Emergency fund, future expenditures (such as vehicle repair funds and insurance and tax funds), our one month of income (YNAB style though I've never YNAB'd), some planned giving, projected renovation expenses, and a few thousand dollars that are just kind of sitting around. Next month, we should be sitting quite a bit lighter on the cash front as we invest the slush and actually make good on the giving.
And now for those who really like money voyeurism:
28% of our net worth is in real estate, including our primary home and a rental property which are listed using book value. In reality, our primary home is quickly gaining value as my handy hubby is making everything awesome (I am nice and give him compliments to help him along). After my husband graduates from grad school, I think we will aim to keep the real estate portion of our portfolio between 30-50% of our net worth. Hopefully, this will include a fancier house for us and rental properties. We both like real estate more than we like the stock market, but we want our real estate to be close to us so we can provide maintenance and manage the properties ourselves.
We do not utilize debt as a leverage tool because we don't trust that we are smart enough investors to use it wisely, and it diminishes our life agility. To us, debt really weighs us down, and we don't prefer to have any of it even if we could get greater returns by taking out a mortgage or other low interest debt. We are approaching the one year anniversary of being debt free (we sold a condo last July), and I can say that it still feels great!
So, this is my anchor point. Stay tuned next month for an update on our change in net worth.