Your net worth is something that you should always be aware of, whether you're scared to calculate it or not

Let's break that down today:

#FinanciallyFluentThread #NetWorth

Your net worth is the value of the assets you own minus the liabilities you owe

Assets - Liabilities = Net Worth

If you forget what an asset is or what a liability is, let me remind you

Asset:

Anything you own that has a monetary value or constantly puts money in your pocket.

Liability:

Anything that you owe. If it takes money out of your pocket, consider it a liability.

Examples of assets:

Checking/savings accounts, securities (stocks/bonds), real estate value

Examples of liabilities:

Loans (auto, mortgage, student), credit card debt

A positive net worth means that you’ve kept your liabilities low & you’ve saved/invested money the right way.

A negative net worth doesn’t mean you’re failing though.

There's likely a shift in your mindset that needs to occur. It takes time to get over money mistakes. Patience.

Let’s look at an example:

Assets:
Primary residence value = $200,000
Investment portfolio = $50,000
Checking/Savings account = $10,000

Liabilities:
Outstanding mortgage = $150,000
Student loans = $25,000
Credit card = $7,000
Auto loan = paid off

Calculating...

{$200,000 + $125,000 + $10,000} - {$150,000 + $25,000 + $7,000} = $153,000

You’d have a net worth of $153,000.

Continue on this path and you’re good to go.

There's a tool called Personal Capital that I'm signing up for this week to start tracking my net worth there instead of a spreadsheet.

Continue to have a high savings rate. Continue to invest as much as possible in what you know / understand.

#FinanciallyFluent