6 Reasons Your Net Worth is Important and How To Calculate It
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How to Calculate Your Net-Worth
It’s easy to calculate your net worth. You just need to find out the value of your assets and liabilities first. Then it’s as simple as subtracting your total liabilities from your total assets.
Your list of assets should include liquid assets, retirements investments, real estate, business assets or equity, personal assets, personal loans receivable, and any other assets you might have.
Your list of liabilities should include mortgages, installment loans (car payments), student loans, credit cards, business loans, personal loans, and any other liabilities.
How to Improve Your Net Worth
At first, calculating your net worth can be a bit intimidating – especially if your score falls into minus numbers. However, this number can always be changed or grown. It’s best to know your net worth so you can use it as a starting point to grow your wealth.
There are two main ways to improve your net worth:
- Paying off your debts and/or
- Increasing your assets
It’s advisable to pay back your debts if your net worth is below zero, this will put you in a better financial position so that you can improve your net worth in the future.
