Wealthy Women Daily Invest in Your Dream Life
Related Articles
What do people mean when they say net worth?
Well, if you want to become wealthy, you need to understand what your net worth is now and how to increase it later.
Most people are so concerned about their tax bracket that they fail to realize they may be making six figures but have a net worth of $0.
How is that possible?
This happens when you spend more than you make. When your liabilities (debts) exceed your assets, you are stuck with a negative net worth. And a negative net worth leaves you with nothing to pass down to your bloodline. It forces you to delay retirement and work pay check to pay check just to make ends meet.
You don’t have to live that way.
The first step you can take to create a strategic financial solution for yourself is to calculate your net worth. This may be one of the best things you document on your wealth-building journey.
Ready to get started? Here’s a simple way to calculate net worth.
Your Tax Forms Are Not A Cheat Sheet
You won’t find your net worth listed on your W2 (year-end earnings statement from your employer). What you’ll find on your W2 is a list of all the money you earned for the year minus any taxes. Taxes are one of the greatest expenses that impact your net worth. If you can lower your tax bill, you can increase your net worth.
Write Down Your Assets
What are assets? Assets are everything you own.
Assets include checking accounts, savings accounts, money market accounts, certificate of deposits, stocks, bonds, real estate, business interests, and other assets that provide you with value in the marketplace.
The value of your net worth depends on how much money you allocate to each of the different assets. A car and home are only a small percentage of a wealthy person’s net worth.
Confront Your Liabilities
What are liabilities? Liabilities are everything you owe.
This may be a painful exercise to confront everything you owe if you are in debt but you have to be honest with yourself in order to make changes. Be real. In order to get to where you want to go, you have to know where you are. You can always go up in life if you know what it takes to get up.
A Simple Calculation
You don’t need to know calculus, trigonometry, or geometry to know your net worth. If you know how to add and subtract, you are on the right track.
Take the sum of all of your assets. Now add all of your liabilities. Subtract your total liabilities from your total assets. What did you get?
If you want to increase your net worth, you have to accumulate assets and reduce luxury liabilities.
Here’s an example to get you started:
Do you need help calculating your net worth? Contact us to get started. We will make the process simple and easy so you can start making progress today.
