Do you understand the definition of net worth? If you follow many other personal finance blogs, you may see bloggers posting about their net worth. The really in depth net worth reports will go into detail about what makes up the calculation. You can easily calculate your net worth by subtracting your total liabilities from your total assets.
As with many things in the finance world, there are several formulas and considerations that may affect your final net worth figure. Take note of these articles which give you the definition of net worth, formulas that can be used, and factors that you should consider during your calculations.
If you’re not sure about how to calculate your net worth, this article will help you to get started. There is a free net worth spreadsheet that you can use. This article addresses how you should “account” for your home, car and education when calculating your net worth.
Companies are just as concerned about the net worth of their operations. It’s because they can assess the value of the entity. It may be a bit more complex to calculate the net worth of a company, but the principles are essentially the same. Net worth is more commonly known as equity and it’s calculated by subtracting liabilities from assets.
It’s one thing to calculate your net worth, but what do you do after you’ve calculated it? Because your net worth tracks your financial health, it essentially gives you what you need to make improvements if they are necessary. You can also use your net worth to make financial projections.
Although the definition of net worth is a pretty standard, how it’s calculated may vary. For the calculation to be accurate, you should understand what assets and liabilities should be used. Read on to find out what are liquid assets and to also get a free net worth calculator.
In my research, I’ve seen several questions about whether primary residences should be included in the net worth calculation. This article presents a case that supports including one’s primary residence. Interestingly, it also looks at whether or not rent should be included as a liability.
Have you calculated your net worth? What does it reveal about your financial health? Don’t forget to download our personal finance checklist. It will help you as you work to improve your net worth.