General Finances

How To Measure Your Net Worth

I never thought I’d write this blog. More less even writing about what a net worth is. A net worth isn’t a complicated thing. In fact, all it does is tell you your financial security.

You take your assets and subtract your liabilities. That will equal your net worth.

Definitions by Websters:
Assets: the total of one’s money and properties.
Liabilities: something (as money) which is owed (Debts).

For example:

Bobs Liabilities:
$50K on his student loans
$10K on his car payment
$5K Credit Card Bills

Bobs Assets:
$100K House - Owes $10K on his house that is worth $110K. 
$20K in his 401K.

Bobs Net worth is ...  
Assets Totaling $120K- Liabilities Totaling $65 = Net worth $55K

This can be an encouraging thing to keep up with. My first goal when we began to focus on this was to get my net worth to zero. Get rid of all of my debt.

There is debate about whether or not to consider your home apart of your net worth. I say do it if you want. If you feel it’ll inflate your number and won’t be as inspiring, that’s fine to separate it.

Regardless, focus on that net worth number and get it going in the right direction.

Next read, “Ways to swing your net worth in the right direction”.

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