Saagar Gupta

How to Determine Your Net Worth

By Saagar Gupta, February 21, 2019

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How to Determine Your Net Worth
One of the leading indicators of financial fitness is net worth. It’s possible to have a positive or negative net worth, and the higher the number to the positive side of the ledger, the better. The process for figuring out net worth is actually quite simple. The number is arrived at by finding out the difference between assets and liabilities. Assets Assets do not include income. A person’s or a family’s net income can impact net worth, but it does not automatically turn into an asset. It’s possible to save or spend money. Money can be spent on assets, and money in an investment account or a savings account would also qualify as an asset. Some of the common assets that will show up in a family’s balance sheet are homes, cars and investments. Liabilities Liabilities in the net worth equation are debts. The debts can include student loans, consumer debt like credit card bills or car loans and home mortgages. The higher the debt a person has, the more likely he or she will have a negative net worth. Many people will start out adulthood with quite a bit of debt. This will usually arise from student loans or credit card bills. Later in the life cycle, hefty mortgages will add to the liability side of the balance sheet. To learn about ways to build your net worth, see my full blog at http://saagargupta.net/how-to-determine-your-net-worth/

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