So Many Shoes, So Little Money – Blog

You Are Priceless

November 17th, 2008

I know you are priceless, but what are you worth? And by that, I mean your net worth. What is your net worth? Your net worth is a snap shot of your overall financial health. You measure it by knowing the total value of your assets and your liabilities. What are assets and liabilities?

Put simply, an asset is anything you own with commercial value. Think of an asset this way: can you sell it on EBay? Obviously, some things you own have more value than others. For example, if you own a vintage Burberry trench coat, it has a lot more value than a pair of Seven for All Mankind blue jeans. Real jewelry is worth more than fake. And, the right swimsuit is priceless. Your assets include things like: how much money you have – regardless of whether it’s in cash, a checking account, a savings account, a Money Market, a CD, a stock, bond, mutual or index fund, or 401K, your clothes, your furniture, your car, or your house. If you own something and you can sell it for money, it is an asset.

On the other hand, a liability is an obligation; something you owe. Examples of liabilities include: credit card debt, student loans, car payments, and rent or mortgage payments or any other kind of loan.

If you add up all of your assets and subtract all of your liabilities you know what your net worth is. Why should you know your net worth? The first reason is net worth tells you how you are doing financially overall. The more money you save or the more valuable the items you own, and the less money you owe, the higher your net worth. The second reason is calculating your net worth on a regular basis forces you to check on your accounts. The third reason is net worth can be a motivator. If your net worth is low, there are things you can do to improve it. If your net worth is high, knowing that and continuing to improve it can help you achieve your dreams. Hello [fill in the blank!] A little self competition can go a long way.

To calculate your net worth you need to collect information on your assets. For example, you need to find out your account balances and the current value of your car. You need to find out the current value of your liabilities, for example the current amount you owe on your student debt or car loan. While it can be difficult to collect the information, once you have the information you need, calculating your net worth is easy.

Filed under: Net Worth

Tags: Lisa Serwin, Net Worth