Marco bought a car three years ago.
He paid 30,000 euros for it. If you ask him what it's worth, he answers "thirty thousand" without thinking.
It's the price he remembers. It's the figure on the receipt, the one he watched leave his account.
But it's not what the car is worth.
If Marco put it up for sale tomorrow, that model, with that mileage, on a used-car site, would fetch maybe 18,000 euros. Perhaps less.
Twelve thousand euros have evaporated in three years. Slowly, with no precise day, with nobody telling him.
That silent decline has a name: it's called depreciation.
And understanding it is what separates a true net worth from an inflated one.
The price you pay and the value that remains are two different things
Let's get the terms straight right away, because the whole article turns on this distinction.
The purchase price is what you spent. It's a historical fact, a figure from the past. It never changes: thirty years ago or yesterday, it stays the same.
The residual value is what the asset is worth now, if you had to sell it today on the market. It's a present fact. And it changes continuously.
For most of the things you own, these two numbers drift apart over time.
A car loses value the moment you leave the dealership. A sofa, a computer, a bike, an appliance: same story. They work perfectly well, but they're worth less than you paid for them, and every year they're worth a little less still.
Depreciation is exactly this: the gradual descent of an asset's value over time, as you use it and it wears.
It's not a pessimistic opinion. It's the reality of the second-hand market, which exists regardless of how you feel about your car.
Why the purchase price inflates your net worth
Here we come to the point that matters for your position fix.
Let's recall what it is. The position fix — your net worth — is a single figure: everything you own, minus everything you owe. It's the coordinate you start from for any decision.
Now imagine building that coordinate by counting your possessions at the price you paid.
Marco's car goes in at 30,000. The computer bought two years ago for 1,500 goes in at 1,500. The living-room sofa still goes in at its 2,000-euro showroom price.
The result is a net worth higher than the true one.
Not by a little. For a household with a car, furniture, electronics, some equipment, the gap can be worth tens of thousands of euros.
And those are euros that don't exist.
If tomorrow Marco needed liquidity and sold everything, he'd collect the figures of the used market, not the figures of his memories. The difference doesn't materialize at the moment of need: it simply never existed.
This is personal finance's gentlest trap.
It doesn't lie to you with a negative number. It lies to you with a reassuring one. It makes you feel more solid than you are, and false security is exactly the kind of thing that leads to bad decisions taken with the calm of someone who believes they have a margin.
That's why, in the position fix, an asset counts for what it's worth today, not for what you paid.
A car bought for 30,000 euros three years ago, worth 18,000 on today's market, enters the calculation at 18,000.
It's less flattering. But it's truly yours.
And the house? Not everything goes down
So far I've talked about things that wear out. But not all assets behave that way.
The house is the opposite case, at least often.
A property can hold its value over time, or even grow, depending on the area, the market, how well you keep it. A house bought for 200,000 euros ten years ago might be worth 230,000 today. Or 180,000, if the neighborhood has changed for the worse. It depends.
The principle, though, is identical: what counts is the current market value, not the price you paid back then.
It applies to assets that rise exactly as to those that fall. The coordinate wants today's truth, in both directions.
There's an important nuance, and it touches the house more than anything else.
The fact that an asset is worth more doesn't make it an asset that works for you.
The house you live in, even if it has appreciated on paper, pays you nothing while you're living in it. On the contrary: it asks you for money — maintenance, taxes, utilities. It remains what we call an Asset−, a possession that absorbs money instead of producing it. I've written about this elsewhere, in a dedicated article, and here I'll leave it at a mention so as not to repeat myself.
Keep these two planes separate. What an asset is worth is one question. Whether it gives you money or takes it while you own it is another. You need both to read your position well.
How I think about it, in practice
Let me tell you how I handle this with my own assets, because the method matters more than any abstract rule.
I don't chase precision to the cent. I chase honesty.
For things that go down — cars, motorbikes, valuable electronics — I use a realistic estimate of what I'd get if I sold them now. For a car, ten minutes on a couple of used-car listing sites is enough: you look up the same model, same year, similar mileage, and see what it's being offered for. That's your figure, rounded down if in doubt.
You don't have to update it every week. A car doesn't change value on a Monday. An estimate revisited every few months is more than enough — a gesture to make calmly, not an obsession.
For the house, the reasoning is slower still. A property's value moves over years, not months. A review once a year, looking at how things sell in your area, is plenty.
The rule I've given myself is simple: better a prudent estimate updated now and then, than a precise figure frozen on the day of purchase.
A slightly conservative coordinate lets you sleep at night. An inflated coordinate deludes you, and the delusion sooner or later presents its bill.
What Cashfulness does with all this
Let me come to how the app enters this story, staying precise about what is confirmed and what isn't — because on a topic like this it's easy to promise magic that doesn't hold up.
What I'm certain of is the underlying principle. When you record an asset in Cashfulness, you record it at its value — and that value feeds your net worth in real time, thanks to the double-entry engine underneath. Assets that depreciate go in for what they're worth now, not for what you paid. This is the heart of the position fix, and it's solid.
Then there are, among the app's tools, a feature called Depreciation and one called Asset Revaluation. The first concerns assets that go down in value, the second those that go up — exactly the two directions we've talked about.
On how they work in detail, though, I prefer to be honest and not fill the gaps with imagination.
What I can tell you with confidence is the method, and the method doesn't depend on which button you press.
Keep your assets at an honest value. Revisit that value calmly, now and then — more often for the things that wear out quickly, more rarely for those that move slowly. Let your net worth tell today's truth, not yesterday's memory.
If the app helps you do it with less effort, all the better. But the gesture that counts is yours: deciding to look at the true value, instead of the comfortable one.
The unflattering truth is the one you need
There's something uncomfortable about seeing the car you paid 30,000 for enter your wealth at 18,000.
It feels like a loss. In a sense it is — but it's a loss that has already happened, not one you cause by looking it in the face. It was there anyway. The only choice you have is whether to count it or ignore it.
Counting it costs a small pang today.
Ignoring it costs a wrong decision tomorrow, taken with the confidence of someone who believes in a margin they don't have.
The position fix works only if it's true. A kind coordinate that tells you what you want to hear takes you nowhere: it keeps you standing where you believe you are, which is a different place from where you really are.
Giving your assets their right price — today's, not your memories' — is one of the simplest, most honest gestures you can make for your peace of mind.
It doesn't make you richer.
It makes you better informed. And from a true position, even hard choices are made with more calm.
— Vittorio