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Understanding that your 401k is included in your net worth is not merely a mathematical exercise; it has significant implications for financial planning and major life decisions. For example, when applying for a mortgage or other types of loans, lenders look at your net worth to assess your financial stability. A substantial 401k balance can strengthen your application by demonstrating that you have a solid financial foundation, even if your monthly income appears modest on paper. Additionally, tracking your net worth over time, including the growth of your retirement accounts, helps you measure the effectiveness of your savings strategy. Without including the 401k, you would be significantly understating your total wealth and potentially misjudging your progress toward long-term financial goals.