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Your Net Worth Can Never Be the Basis for Your Self-Worth

Your emotions will go haywire, and you’ll lose your identity.

I used to grocery shop on one of the poshest streets in Amsterdam. When I’d turn onto the block in my Porsche, retailers would look out the windows of their shops and say happily, “Great! There’s Sebastiaan, and he’s going to spend a couple of hundred euros in our store again.”

After I embarked on my life redesign as described in my book Redesign, I read the invoice for my laundry service for the first time. “Wow,” I said to my girlfriend, “a thousand euros a year, that’s a lot for getting our clothes clean.”

“That’s our monthly invoice,” my girlfriend replied.

When I got out of the hospital in 2010 and started selling my businesses and redesigning my life, I couldn’t afford to pay $4 for a single organic orange anymore. I also had to do my own laundry.

First, it was hard, a big blow to my ego. People have a myth that every successful entrepreneur is financially astute when it comes to having money put away for a rainy day. They think all entrepreneurs have a cushion of savings and investments.

It’s just not true.

You can be great at generating value as an entrepreneur and horrible at creating an intelligent financial plan for the long term. I know it seems incongruent, but it’s true, and the newspaper headlines about bankrupt celebrities and rap stars are proof.

The mentality I had in my old life was something like, “I’m making much money right now. Why worry about the future?”

However, to be a healthy entrepreneur, you have to think not only about making money for today but also about making money for tomorrow.

The money your business is generating is not your income. Cash and income are as different as the stars and the sky. Related but very different. Whether you are intent on building a lucrative business or already own one, that doesn’t mean you’ll become rich, or you are rich.

You still must live within your means and steer clear of the unholy mayhem of consumption and consumerism.

You must even design investments and create savings to cushion the fall when stuff happens, and things always happen.

Maybe the risk-taking and creative nature of being an entrepreneur lead to impracticalities when it comes to designing a practical financial plan. I’m not sure.

However, what I do know for sure is that you can’t eat rocks, as they say in real estate about being house rich and cash poor.

Also, your net worth can never be the basis for your self-worth.

Otherwise, you’re setting yourself up for disaster if your business is sold or goes south. Your emotions will go haywire, and you’ll lose your identity.

If you see yourself and your company as one entity, then if it goes bankrupt, you will go bankrupt inside yourself.