The American Balance Sheet

Financial advisor Carl Richards has a good piece in The New York Times this morning arguing that with so much information on the Internet and with people living such complicated lives, many of us don't know where to begin when getting control of our finances. His advice: Start by calculating your net worth. Assets minus liabilities -- it's basic stuff, but you have to know the basics to get going.

The Federal Reserve actually does this every quarter for American households in aggregate, showing how much money we hold in various assets, how much we owe in liabilities, and our collective net worth.

Here are a few of the top asset categories we own and how they've changed since the last recession started in 2007:

Source: Federal Reserve.

There's a lot more cash, a surge in Treasury bonds, and about the same level of stocks and mutual funds. Obviously, the housing bust wiped out trillions of dollars in real-estate value.

Now here's total net worth:

Source: Federal Reserve.

That's still about $3.5 trillion below prerecession levels. That works out to a difference of $31,000 per household.

Net worths in 2007 were a bubble fueled by real estate, so there's no reason to think we should have rebounded back to past levels quickly. But the psychological blow this deals is devastating. And what's frightening to think about is that most of the money piling into cash and bonds is earning a negative return after inflation. Americans in general are ill-prepared for retirement. The current rush to cash and bonds will almost certainly leave them even worse off.