6 Reasons You Should Know Your Net Worth and How to Calculate It

Daniel Penzing
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What is Net Worth?

Net worth is a term used to describe an individual’s total assets minus total liabilities. That’s it. The idea is that your net worth is the amount of money you would have if you sold everything you own (your assets) and paid off every debt you owe (your liabilities).

Net worth is one of the most important financial concepts you need to know, lest you end up broke and being financially flogged!

But I’ve never received that many letters about how to calculate net worth or people asking about net worth as I have received with the subject we are covering in this article about net worth.

What are Net Worth Calculators?

There is a slew of really cool and free net worth calculators out there for you to use. You can use these free tools to calculate your net worth as well as see how you are performing.

Why Net Worth is Important

Have you ever wondered your net worth? What your net worth is basically the value of everything you own, minus all of your debts. If you were to pass away tomorrow, what would happen to your finances? Would your family be okay? This is why it is important to know your net worth, even if you don’t have many assets.

Net worth is obviously not what happens at the end when you pass away, but it can help give your family an idea of what you have saved for them, and what it is your family will be left with when you’re gone.

If you are serious about creating wealth, you need to know what your net worth looks like!

If nothing else, you most likely have some form of a credit or debt. And if you’re struggling to pay things on time or you have a lot of credit card debt, you are not in good shape and your net worth will reflect that.

If you are in good financial standing, net worth can be a great tool to show others how well you are doing.

It can also be a very powerful tool in your goal to accumulate wealth.

How to Calculate Your Net Worth

How to Improve Your Net Worth

Net worth, also known as “net wealth”, or “net value”, is the sum of money or assets that you own minus the sum of money or liabilities that you owe. In other words, it’s your assets minus your liabilities. These aren’t hard and fast terms; “net worth”, for example, is sometimes used interchangeably with “net value” and “net wealth.”

Nobody cares about your net worth. It isn’t something that’s going to impress someone. Your job probably doesn’t give raises for out-performing co-workers when it comes to increasing your net worth. But your net worth is important, and it’s something that every single person should know. Knowing your net worth helps you to appreciate what you have, gives you an idea where you want to go as a person, helps you plan for your retirement, keeps you from making risky financial decisions, and so much more.