Module 4 · Budgeting and saving
Net worth: what you own minus what you owe
How to draw up your own balance sheet, why income is not the same as wealth, and how lifestyle inflation and forgotten subscriptions quietly hold it back.
This lesson is not translated into your language yet, so it is shown in English.
This lesson is still locked
Pass the quiz in “Saving with a purpose” to unlock it.
Go to “Saving with a purpose”This module opens after you finish the previous one — or pass its module test if you already know it.
In this lesson
- Calculate net worth from assets at today's value minus liabilities
- Explain why income and wealth are different, and why the trend matters more than one snapshot
- Recognise lifestyle inflation and use a rule such as saving half of every raise
- Work out the yearly cost of subscriptions
Peter, 31, earns €4,500 a month and drives a new car. His aunt Zora, a retired nurse, never earned more than €1,800 a month. Which of them is richer? The honest answer is that you cannot tell from income. You need to know what each of them owns and what each of them owes.
Net worth in one line
Your is everything you own minus everything you owe.
- An is something you own that has a money value: money in accounts, a pension fund, a home, a car.
- A is money you owe: a loan, a card balance, a phone instalment plan, €200 borrowed from a friend.
Value assets at what they would sell for today, not what you paid. A car bought for €15,000 that would sell for €9,000 counts as €9,000.
Net worth can be negative. Many students and young adults owe more than they own, and that is normal. What matters is the direction: is the number rising from year to year?
Some assets are easier to use than others. can be turned into cash quickly without losing value, such as money in current and savings accounts. A home may be your biggest asset, but it is not liquid.
One more surprise: moving money between your own assets and debts does not change net worth. If you use €500 of savings to repay €500 of a loan, assets and liabilities both fall by €500. You do gain later, through lower interest.
Income is not wealth
A high income spent in full builds nothing. A modest income with steady saving can build a lot over the years. Two numbers tell the real story: how much of your income you save, and how your net worth changes over time. Checking once or twice a year is enough for most people.
Lifestyle inflation
When income rises, spending often rises to match. A bigger flat, a nicer car and more meals out soon feel normal, and saving stays where it was. This is . It is hard to undo, because cutting back later feels like a loss.
One common counter-rule is to save at least half of every raise. With a raise of €300 net a month, saving €150 and enjoying €150 adds €150 × 12 = €1,800 a year to your savings, while your life still gets better.
Subscriptions: small, automatic, easy to forget
A is a regular payment for ongoing access to something: streaming, music, cloud storage, apps, a gym. Each one feels small. Together they add up.
Five subscriptions at €13.99 + €10.99 + €2.99 + €9.99 + €9.99 cost €47.95 a month. That is €47.95 × 12 = €575.40 a year, and about €5,754 over 10 years, before any price rises. A regular check helps: list them all, turn each into a yearly cost, then keep, cancel or rotate them.
Try it yourself
Check your understanding
10 questions. Get at least 8 right to unlock what comes next.