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
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
Income and property taxes
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.
Total Assets N456,000
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.