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Net worth

In France, when it comes to looking at someone’s wealth, two concepts co-exist. These two concepts are “patrimoine net” and “patrimoine brut”. “Patrimoine net” is simply net worth in English. There is however no real English equivalent of the concept of “patrimoine brut” and in a way it’s logical since this is not an extremely useful concept. “Patrimoine brut” is equivalent to taking the net worth and adding debts to it. In other words, it is possible to have a high “patrimoine brut” while having a low “patrimoine net”. What really matters at the end of the day is the net worth. If you a higher net worth than you neighbor you are ultimately richer than him. But how do you calculate net worth? In countries like France many people got easily confused on how do you consider if someone is wealthy or not. For most French people, someone who earns 3 000 euros a month but has a net worth close to 0 is richer than a person who makes 1 000 euros a month but has a net worth of 500k euros. This is at least questionable.. If you have a net worth of 500k you have plenty of ways to make this money grows and hence increasing your income. Even with a very conservative annual return of 2%, your income would increase from 1 000 euros a month to more than 1 800 euros. But not only would your income grows, your net worth would still be unchanged at 500k, that is 500k more than the other person.

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