Establishing Your Net Worth
Have you ever heard of wealthy people being termed ‘worth X (amount of dollars)’? Maybe, this celebrity is worth 5 million dollars, or that heir is worth 35 million dollars. This is called their net worth, and believe it or not, we all have one. Some people have a 0 net worth or a negative net worth, but it’s still their net worth. Knowing your net worth may be useful from time to time when filling out some financial forms or when planning finances.
Your net worth is comparable to your total assets subtract your total debts. To begin, add up all of your assets. You might be surprised at how many assets you have. The obvious are your house and investments including any retirement accounts such as a 401K or IRA, stocks, bonds, mutual funds, items, and real estate. Your vehicles are also assets, but make sure you only include their fair market value. In other words, if you were to sell them today, how much would you get? Some other assets include high possessions such as older binoculars, collectibles, and valuable art.
Next, you will need to calculate all your debts, or simple debt, money your debt. This includes the amount your debt on your mortgage and vehicles, what you may owe on items you loaned such as computers and other high price items, credit card debt, student loans, and absolutely any other debt your debt. A liability means you are held liable to the person who you borrowed the money from. This money is not yours which is why it’s subtracted from your assets. Michael Blakey Net Worth
Finally, subtract. Assets subtract debts means fairness. In other words, subtract your balance from what you have and you get what your worth, your net worth. Figuring out your net worth is an alternative way to see your location in your life financially so you can set goals and make a plan. If your net worth is a negative number, this means you are in bad debt. Even if you get a number close to zero, you are still no place near where you should be for retirement. You can’t live off from social security alone if you do not don’t mind downgrading how you live now considerably.
Take your net worth as a starting point. If you have a net worth of $100, 000 or more and you are under 30, you have a good start. Keep saving and investing your money so you have reached least able to keep your total well being when you stop working. If you have an equal net worth and you are much older, you might want to be a little more aggressive in your savings, but not so aggressive in your investments to avoid losing money. Let your net worth now be a starting point for the large home egg cell in your future.