What does "Above Water" Mean?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 22 August 2019
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"Above water" is a term that is often used to describe a financial state in which the assets held by an individual are considered to be financially viable and stable. The term conveys the idea that the assets are currently performing at or above expectations and are not losing money for the investor or owner. Being in an above water state means that the individual is managing to maintain the value of his or her assets and manage debt even in the face of adverse economic situations that are threatening to overwhelm others.

The term is sometimes expressed as keeping one’s head above water. In this application, the implication is that there is some danger of assets losing value to the point that the owner sustains a net loss, effectively lowering his or her net worth. When the owner is able to keep his or her head above water, this means that issues threatening to drag the owner below the water, or reduce the net worth of the portfolio, are being dealt with effectively and the owner is managing to at least maintain an equitable net worth in spite of what is happening in the marketplace.


The benefit of being considered above water is that the individual is likely to be considered a good credit risk and may be able to secure additional financing to help deal with an impending financial crisis. This in turn fortifies the financial reserves of the individual and makes it more likely that he or she will be able to weather the upcoming adverse conditions. For this reason, the act of staying above water sometimes calls for proactive planning that includes successfully projecting an impending crisis and taking the necessary steps to minimize its impact before the crisis actually arrives.

Staying above water can be a difficult task, especially when the economy in general is experiencing a downturn. For example, if a recession occurs and unemployment increases, households that have lost the primary source of income may find it very difficult to remain current on debt obligations, even if expenses are trimmed to a minimum. People who anticipated the recession and took the steps of lowering debt and saving financial reserves before the advent of the downturn will be better equipped to remain above water throughout the economic crisis, and be prepared to replace the depleted reserves once the economy improves.


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