How Much Are You Worth?Financial
Knowing your net worth is the starting point to making financial improvements.
Not knowing your net worth is like wanting to lose weight without first getting on a scale to see how much you weigh. There is no way of determining that you met your goal without first measuring where you are today.
1. The difference between assets and liabilities
2. The measure of your wealth.
You can calculate your net worth by adding up everything you own. Start with your house, car, 401k, mutual funds, furniture and any jewelry you may own.
You then subtract everything you owe. List out all debt: mortgage debt, student loans, credit cards, etc.
Sometimes it can be hard for us to view on paper how bad our financial situation really is. It seems most of us don’t do this step because we are afraid to learn how much we really owe. We prefer to be in the dark when it comes to our finances. We think if we ignore it, maybe the debt will go away. However, in reality, it is critical to see the total picture . . . no matter how it looks.
While your net worth may possibly start out negative when you're young, with few assets and high college loans, you want your net worth to grow over time.
I received a message just this week from a couple thanking me for helping them increase their net worth by 296% over the last year! This couple went from a net worth of $30,000 to $119,000 in one year! It started with them knowing where they were and then following the plan to improve their finances.
Want to know what your Net Worth should be? Thomas J. Stanley provides a good rule of thumb to determine this in his book The Millionaire Next Door. Stanley states to, “multiply your age times your realized pretax annual household income. Divide by ten. This is what your net worth should be.”
How are you doing financially?
If you are not where you would like to be, it’s not too late for you to reach good financial health.
Improving your net worth has little to do with how much you earn, but a lot to do with how you use the money that you have.
Take the Financial Health Assessment today to determine your next step to building your financial freedom.