Money Matters: What are You Worth?
Obviously, you are worth more than just money! But, since we are talking financial education today, we want you to consider your financial worth.
The best way to gauge your financial health is to consider yourself as a business – You are the product – add up all you own and subtract everything that you owe. It would be helpful if you could actually break down a balance sheet and income statement for these purposes, but you can keep it easy!
Here’s how our friends at Practical Money Skills for Life suggest doing it.
Net Worth = Assets – Liabilities
Your assets are everything that you own. They may include your house, car, furniture, motorcycles, trail bikes, camping gear – anything that’s worth money. Assets also include all savings, cash on hand, and investments. Even the stuff you still owe money on is included.
To determine your total assets, figure the appropriate market value of everything you own. Consider how much an item might fetch if you were to sell it online. Be honest and realistic.
You can even go a step further and figure out future assets. If you have money in an interest bearing account, or in investments, you can calculate how much your money will grow.
Your liabilities are everything that you owe. They’re the total amount you would need to pay off your mortgage, credit cards, student loans and loans from family and friends. Be sure to include any interest and finance charges. This information is typically included on your monthly statements.
As with assets, you can also track liabilities into the future by calculating your repayment rate and projecting when your debts will be paid off.
Ideally, you will have more assets than liabilities. As you grow older and advance in your career, you’ll earn more, reduce debt and increase savings.
Age Median Net Worth
|35 and younger||$14,200|
|75 and older||$163,100|
*Source, Federal Reserve 2004 Survey of Consumer Finances.Saving money is the most powerful tool for generating personal wealth. And it’s even more powerful when you’re young. That’s because the more time you have to earn interest, the more wealth you’ll acquire.
- How We Calculate Our Net Worth~Now Calculate Yours! (canadianbudgetbinder.com)
- Net Worth Cheat Sheet (divacfo.com)