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HOW TO CALCULATE YOUR NET WORTH

HOW TO CALCULATE YOUR NET WORTH

Calculating one’s net worth is not as difficult as it sounds. It is simply the total value of one’s financial and non-financial assets minus liabilities where assets refer to properties owned by an individual that have financial value and liabilities refer to debt. Examples of assets, therefore, are land, cars, financial investments, savings, jewelry, and the like while liabilities include loans, rent, and so on.

Calculating your net worth

To calculate your net worth, simply take the following steps:

1. Make a list of all your assets and know their financial worth.

2. Make a list of all your liabilities and their financial worth.

3. Subtract your liabilities from your assets and the figure you have is your net worth. Note that it’s possible that your net worth would be negative if your liabilities exceed your assets.

Also, note that sometimes it’s possible to do this calculation and have much money in terms of net worth but still not have enough to cover your day to day expenses. For instance, you could own a house and still be unable to meet your financial needs. That simply implies you have to increase your liquid net worth. The term, “liquid net worth” was coined to capture all assets that can be converted into cash often within the space of 24 hours. This often comprises cash, savings, stock, bonds, and the like. Wealthy people, therefore, do not just have a large net worth but also have a large liquid net worth that can be used to cater to their day to day needs. To find out more on how to build your liquid net worth and also assets in form of properties, kindly contact the Secure Capital Team and we’ll be glad to consult with you. Thank you.

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