Are you "asset rich" but cash-flow poor? It’s a common trap: counting home equity or business value as retirement fuel when, in reality, you might never be able to touch that money. Today, we’re breaking down a better way to look at your balance sheet — including the "honest test" for your assets and how to calculate your true wealth.

Here’s what we’re covering in today’s Clark Smart Investing newsletter:

A net worth calculator can give you a quick snapshot of your finances — and watching that total climb can feel reassuring. Your home equity, retirement accounts, investments, savings, and even personal property all get rolled into one big number meant to represent your financial health.

But your net worth doesn’t always reflect how financially secure you really are. How much of that money can you actually use, invest, or rely on in retirement?

The standard net worth formula — assets minus liabilities — treats every dollar the same. It counts $300,000 in a 401(k) the same as $300,000 in home equity, even though one is liquid and growing, while the other requires selling your home to access. It treats a $20,000 savings account the same as a $20,000 collectible or family heirloom, even if you’d never sell it.

To understand your real financial position, you need more than a single net worth number. You need a framework that separates usable wealth from money that’s tied up in property, possessions, or long-term plans so you can make smarter decisions about saving, investing, retirement planning, and financial security.

In the full article, we reveal the three tiers of personal wealth, how to actually think about your home’s value, and the special case of business ownership.

Every week, we'll ask a new question to get your take on the latest financial trends and topics.

Last Week’s Poll Results

We asked: “How much of your retirement nest egg is in retirement accounts like 401(k)s and IRAs?” Here’s how you answered:

In this recurring Q&A, we share questions that have been answered by Clark Howard or Wes Moss on the podcast. Submit your question today!

Larry in Ohio: My wife and I both retired last year. We have enough cash for three years of expenses. We have always and still have 100% of our retirement in broad based ETF's. Do you see any reason that we need to have bonds in our portfolio?

Wes Moss says: The short answer here is no. You have what I would call an infinite time horizon. Now, it doesn't mean you don't want to use your money over time, so you do want to invest it appropriately. If you are have a high risk tolerance, then I don't see you needing to go beyond the stock ETFs. But here's the other thing. You have three years worth of dry powder, which is probably money market and short-term bond funds, so you already do have bonds. You already do have a piece of the pie. Maybe you're not looking at that way, but look at your dry powder and your investments all as one pie chart.

The Team Clark Consumer Action Center is a free helpline that can help you navigate your money questions. Call 636-492-5275. Visit clark.com/cac for more information.

This information is provided to you as a resource for informational purposes only and is not to be viewed as investment advice or recommendations. Investing involves risk, including the possible loss of principal. There is no guarantee offered that investment return, yield, or performance will be achieved. This information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Any company names shown are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. The views and opinions expressed are for educational purposes only as of the date of production/writing and may change without notice at any time based on numerous factors, such as market or other conditions. Always consult your own legal, tax, or investment advisor before making any investment/tax/estate/financial planning considerations or decisions.