How do you determine your networth?

I have been regularly posting my net worth on this blog. But, actually, how do you determine your net worth? What is the standard for rich and poor? Is a person with $40,000 in assets and $1000 monthly expenses richer than the one who only has $30,000 but $500 monthly expenses?

Obviously, there are many ways to measure your net worth. Besides the numbers, I typically like this one: how many months you can live on without having a pay cheque? Using the example above, Person A would be able to go without having a pay cheque for 40 months while Person B will be able to do so for 60 months. Although Person A has higher net worth in numbers, Person B is actually has more net freedom.

This method not only measures wealth, but it measures wealth against lifestyle costs as well. It gives higher score to those who live below their means since they are truly more flexible than those who just live larger than life.

So, what is your score in terms of your pay cheque free month?