HOW TO CALCULATE YOUR NET WORTH


Today we’re talking about the single
most important metric in your personal financial life net worth. Stay tuned! Welcome back to WhiteBoard Finance. My name is Marko and I’m here to help you
master your money and build your wealth. Today we’re talking about the single most
important metric in your personal financial life and that is called net worth. To see more videos about personal finance. Stock market investing and real estate investing
hit the subscribe button below with the little bell to get notified. Let’s get into it. So what is net worth? Net worth is simply how much you own versus
how much you owe. Otherwise known as assets minus liabilities. Tracking your net worth is important because
it’s similar to tracking a diet. You want to look at how many calories you
have coming in versus how many calories are coming out. It’s the same way with tracking your
net worth. You’re counting the dollars that are coming
in buying new assets minus the dollars that are going out due to liabilities. Tracking is important because it drives future
financial decisions to hopefully increase your net worth not decrease it meaning you’re
increasing your assets and decreasing your liabilities. So how do you calculate net worth if
you remember me mentioning earlier. It’s simply your assets minus your liabilities. So what we do is you make a column full
of assets. So this could be if you own your car
outright. This could be any money in a checking account. And the money in a 401k etc. Anything that you own and don’t owe anything
on is considered an asset. And then you have liabilities. So these can be loans that could be a student
loan. It could be a personal loan. It could be your mortgage. If you owe money on your home that is
not an asset that is a liability because you’re paying off a mortgage every month. So all you do is you add up all your assets
down here you add up all your liabilities down here. You subtract the two and that number right
here. Is your net worth. So it’s a very simple equation but it sounds
intimidating if you’ve never tried to find out your net worth before. So I hope this makes it a little bit easier. So what if your net worth is negative. There’s nothing to worry about depending on
what stage of life you’re in. Life happens to everybody. As I mentioned in a lot of my videos because
it’s true. A good example would be if you’re young in
life say you’re just graduated and you just got your new job. You may not have had enough time to accumulate
enough money or assets versus your student loans that you may have so you could be in
a negative net worth if you’re in middle of life. You could potentially have a new house or
a big mortgage. So even though you own your cars outright
and you have a lot of assets the big mortgage could be weighing negatively on the liability
side putting you in the red. Or you can simply be an over borrower. This is someone who earns sufficient income
but they just keep spending and spending and spending and now they’re in the red. They have a negative net worth. So if you want to learn more about saving
money every month check out my other videos. I’ll leave them in the description below. I have a couple of videos and saving money
every month and also how to pay down debt. This will ultimately help you get in the green
and outweigh those liabilities with your good assets. Those are pretty simple wasn’t it. The final point that I want to touch on is
how often you should calculate your net worth. Some people like to do it monthly. Some people that are very anal like to do
it weekly. I stick to a quarterly schedule. This gives me three months to actually see
if there’s any big adjustments whether I took out a loan or if I paid off a large loan typically
things don’t happen in my life that quickly. So I stick to a quarterly schedule every
three months. It keeps it a lot more organized and it’s
a lot easier to manage in the long run. And conclusion I just wanted to say that tracking
your net worth shouldn’t be used to keep up with the Joneses or to compare yourself with
other people. That is probably the worst way to use your
net worth calculations. Finding out your net worth is simply like
keeping track of your diet. Again it’s like calories in versus calories
out. You want to make sure that you get that personal
net worth nice fat. That way you can survive any cold winters. And I just came up with that on the spot and
that’s pretty freaking good. If you ask me. So all joking aside guys keep your wallet
fat build your wealth. Answer the question of the day below. I want to know if you’re happy with your current
net worth or are you indifferent or are you unhappy with it. If so what are you going to do to change that. Again if you’ve got any value out of this
video whatsoever please comment like subscribe below. It really helps you guys. I put a lot of time and effort into these
videos and I would really appreciate it. Thank you and have a prosperous day. I’ll show you my net worth if you show me
yours.

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