Self worth vs Net Worth – You’re Worth More than Money

A recent study published on Sage Journals dived head first into the issue of self worth vs net worth – specifically asking whether people who tied their self worth to financial success were happier overall. The study revealed that those whose self worth is tied to finances generally feel more loneliness and social isolation than those that who do not.

I think this was a fascinating study. We put so much emphasis on making money and financial success as the indicator of life success that it’s literally hurting people. Our culture of work until you drop is destroying people’s self worth. And guess what, self worth is actually super important.  

Why is Self Worth Important?

Self worth is feeling good about yourself without external factors. It’s important because people who are more confident with themselves and their abilities tend to be more successful and happier in their lives. It also just feels good. It feels good to be comfortable in your own skin. Sometimes, we don’t consider how important it is to just feel good about ourselves.

What Defines Your Self Worth?

The problem with self worth comes when people start defining it with external factors, like net worth. That’s where this entire self worth vs net worth battle came from! The thing is, many people do define their self worth with things outside of themselves, such as how much money they have, what type of car they drive, or what job title they hold.

In my completely unprofessional opinion, I think people who base their self worth on these factors are doing themselves a disservice. Self worth should come from within. And the study about self worth vs net worth actually supports that!

Self Worth vs Net Worth

Some people do base their self worth on how much money they have in their bank accounts though. Why is this?

I think it relates back to the just world fallacy. People think that being successful means that they are worthy of success, because if good things happen to good people, and good things are happening to them, it follows that they must be good, right? The problem with that thought process, as evidenced by the study, is that it doesn’t actually lead to happiness.

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Because guess what? Bad things also happen to good people. And a financial success can easily turn into financial ruin depending on what happens that day. If you’re basing your entire sense of self worth on the whims of the stock market, or an employer, or anything else that’s outside of your immediate control, you’re giving that thing way too much power over you. And you definitely don’t want things you can’t control to have that power.

What is Success?

But, I don’t blame those folks. Our work culture has decided that success only means financial success. Successful people are the rich and the wealthy. I disagree with this notion entirely. In my opinion, success is more about being happy with who you are and what you are doing than what you have in the bank. Unfortunately, people seem to idolize the wealthy for the simple fact that they are wealthy. Money seems to be everything in our society – and I get some of that.

Everything in our society relates to money. We can’t do anything without it. We can’t eat, cloth ourselves, shelter ourselves, or stay connected without it. It makes sense that some people would associate having a lot of money with self worth and being successful given that we need tons of money just to survive.

How Do We Change Things?

How do we mitigate this self worth vs net worth struggle then? Well, first, if you are basing your self worth on your financial success – stop! I know, I know – it’s not that easy. Changing your entire world view is hard. If you’ve based your self worth off your net worth for your entire life, changing isn’t going to be easy.

My best advice for you it to speak to a therapist. There are people out there trained to help you discover your inherent value – the value that you have as a human being. We all have value, regardless of our job titles, bank accounts, assets, or liabilities.

It may seem like I advocate for therapy an awful lot for a finance blog, but that’s because I’ve been there and it works. It’s also because there’s no shame in seeking professional help to undo the years of programing that we received about how life should be. There’s no shame in dismantling the systems that kept you trapped in a certain life script, and no shame in exploring other options. Therapy can help with all of that.

What Does this Have to do with FIRE?

I think the study relating self worth to net worth has interesting implications for the FIRE movement. I bet you’re wondering how these things relate to each other. Well, if I can find a way to relate FU money to UBI, I can find a way to relate the self worth vs net worth debate to FIRE!

I don’t want to speak for everyone seeking financial independence (But I will!).  I think the fire movement is a backlash against our work culture and the idea that we are only as good as our net worth. That seems counter-intuitive, because most fire seekers are working on building a high net worth, but it’s not because they associate it with their self worth. It’s because they want to survive in the world without having to worry about it anymore, and the best way to do that is to accumulate gains now. They aren’t hoarding the money because it makes them feel good about themselves, they are building wealth that they can spend down so they don’t have to work anymore. Outside of noping out of the entire system (which is difficult if you want to actually live and be even a tiny bit comfortable) it’s the best way to opt out of the idea that we are only worthy if we make and have tons of money.

People are pursuing financial independence to spend more time with their families, work on their passion projects, homestead, and do a plethora of other things that don’t really involve making tons of money. We just realize that money is the tool that will best help us achieve these other goals. And you know what? The people who are doing these things do seem to be happier than the people who aren’t.

Are FIRE Achievers Happier?

I’d love to see a study comparing the happiness of people who have achieved financial independence to those who aren’t even considering it. It would be interesting to see if this lifestyle really does result in more overall happiness. But alas, I don’t know how to get a study like that funded. If anyone knows of a study like that, please link it to me!


1 thought on “Self worth vs Net Worth – You’re Worth More than Money”

  1. I was making what was big money for me the last three years I worked. My last year I made 24 times my first years pay. I felt rich. But I also realized I had invested enough that there was no need keep working a job I had stopped loving. So I retired years earlier than I had planned. That was five years ago, and my good life has only gotten better. I’m fact I turned down an offer of twice what I used to make just to stay retired. I used to see myself as my job, now I see myself as husband, dad and friend. I really like this guy I’ve become. Money isn’t so important to him.

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