Wondering what your net worth is?
So you’re wondering what your net worth is. Your net worth is essentially everything you own minus everything that you owe. So if you have $10,000 in savings and you owe $5,000 in credit card debt that in reality, your net worth is only $5,000. What you own minus what you owe if your net worth.
How do you determine your net worth?
How do you determine your net worth? Well, first of all, you need to go through and find out everything that you So you’re going to look at things like savings, the value of your any emergency funds that you have, any cash that you have, any retirement accounts that you have, any other thing that holds value, like reward points. if you have jewelry or collectibles or art, you want to take the value of those and you’re going to include it as well. You’re going to want to put all of that into your net worth calculation specifically on your asset side.
Then in another list, you’re going to create a list of what you owe. And those are going to be things like your mortgage. If you’re purchasing a home, or if you have student loans, which a lot of us do, you’re going to list your student loans there. If you have borrowed to purchase a car or you have debt on a car that you’re still paying off, then you’re going to put the amount of that car debt there.
The Most Common Problem
And then I think the most common one is credit card debt. You’re going to want to list the total amount of credit card debt. So now you’ve got your assets, which is what you own and your liabilities, which is what you owe. And you’re going to subtract the liabilities from the assets. And that difference is going to give you your net worth.
And you might be surprised that your net worth is higher than you expected. You may also be surprised that it’s actually a lot lower. It might be even in the negative! If it’s in the negative or it’s close to zero, you’ve got a lot of work to do on controlling your spending on reducing your debt and then understanding why your debt’s growing, which means getting out of things like interest based transactions and interest bearing debt.
If you’re new to the topic of personal finance and you want to learn more, you can go to my website, JoeBradford.net/start and get started learning.