Why
and how to calculate your net worth
If you want to make progress financially in a
definite way, then you must know where you are now financially. Do you want to
monitor your financial progress? then
knowing your current net worth is the beginning.
Calculating your net worth will
help you to figure out where exactly you
are financially.
Your net worth is the result you
get when you subtract your liabilities from your assets.
Simply say your net worth is the
figure you get when you add up the value of everything you own from your home,
to the cash in your bank account and then subtract from what ever figure you get the value of all the
debt you own which may include loans, mortgage and all other debt.
Calculating your net worth can be a
very simple process, it only requires you to
add up all of your asset, add up all of your liability and to subtract
your liability from your asset.
How to calculate your Net worth.
-
Make a list of all your Assets in a
piece of paper. Think of all your available asset. List them on a piece of
paper and tag a price to each of the item on the list. Your list will include
your houses, business, cars, bank account balance etc
-
Also make a list of all your liability.
think of all your debt. Remember all the
people or organization, you owe and add them to your list. If you are owing
your landlord, also include it in your list.
Add
a price to each item on your list and sum them up, to get your total debt.
-
Lastly subtract your liability from your
asset and whatever you get is your current Net worth.
How often should I
calculate my net worth?
I recommend you do that every month. Your goal
each month should be to increase your net worth over the previous month.
Labels: Business Advice, Idea, Net Worth
