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Why you should know your networth

Bysavhelp

Jul 26, 2020

Why you should know your networth

Knowing your net worth let you know how wealthy you are to solve extents. It doesn’t mean when you know your net worth you are a rich person. It only gives you a break down of your financial status. And how you should further handle your finances.

Your networth measures your assets and liabilities.

What are assets? 

Assets are something that brings income, such as house rental, job, business etc. Anything that brings in an income is an asset. Machines that produce goods are referred to as assets. More examples of assets include Real Estate

Cars

Precious Metals

Golf

Stocks

Bonds

Cash

Investment Accounts

Equipment used for production.

What are liabilities?

A liability is something that you spend money on. It reduces your money. Example of liability is, house rent that is being paid yearly, feeding, clothing, holidays etc. These things take away your money

More example is liability 

Car loans

Student loans

Mortgages

Income and property taxes

Credit Card

To balance your networth you need to balance your asset and liability. Make sure your asset is always above your liability. If you dont take care of your personal finances, your networth will be very low.

Knowing your networth can help you put your finances on track knowing what you have was an asset and how to avoid heavy liability.

House                           N70,000

Car                                 N88,000

Jewelry                         N9,000

Stocks                           N13,000

Total Assets                  N456,000

Liabilities

Mortgage                       N15,000

Car Loan                       N47,000

Student Loans             N59,000

Total Liabilities           N327,000

Net Worth                    N75,000 (N456000-N327,000)

Above is a good example of how to calculate your net worth. Separating your asset from your liability will give you your total network.

I remember asking some of my friends if they know their net worth, they all looked at me and started laughing. They feel it’s only companies that calculate the net worth and wealthy people especially those that appear on Forbes.

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