This week I’m going deep into all things Net Worth. What does Net Worth mean? How can you find out your Net Worth? Is it important to know your Net Worth? Why would you want to know your Net Worth? You get the picture!
I spent a lot of years having a negative Net Worth (I almost wrote self worth but caught myself in time!), without getting into the debt talk all over again (you can find out about it on the about me page!) we are barely on the positive side now but WE ARE! and that’s pretty exciting!
So, what does Net Worth mean? according to the Merriam-Webster dictionary the legal definition is as follows:
Net Worth: the excess of the values of assets over liabilities. (what &xӏ!&)
In my definition it is: the difference between what you own minus what you owe is your Net Worth, and yes it can be negative!!!
How can that be? you ask. Well, if you owe more money than the things you own, then your Net Worth is negative. But never fear, it can change at any moment! I’m going to tell you how, eventually, but for now, let’s keep getting into this rabbit hole and figure this Net Worth thing out!
We’ve already established that the Net Worth is calculated by adding up ALL the things you own. Example:
Then you add EVERYTHING you owe:
Is that clear? There are a lot of Net Worth calculators all over the internet that can help you figure out your totals, but don’t get too fancy and hung up on interest rates and exact values for the things you own as that can be a road block to getting to what really matters!
Now, if the totals were the other way around, if you owned $266.000 and owed $271.000 your Net Worth would be -$5.000, which means if you sold everything you owned today and paid off all your debts you’d still owe $5.000.
Remember, just because your Net Worth today isn’t astronomical, or even positive, it does not mean it won’t be!!! Our Net Worth was negative hundreds of thousands of dollars and it’s not much today but it sure has improved, it’s positive now!!! You also need to remember that the biggest step for you to build your Net Worth is to acknowledge it and brainstorm how you can actively work towards raising it!
Coming up: How, What you earn and what you spend, has to do with Net Worth!, even if it’s not shown in the math!
S – The Sparkling Budgeteer
Oh thank you for sharing this Sara.
This has really shown me how far I’ve come in the last 20years, and given me a reminder to celebrate where I am today.
Hi Becky!
Thank you so much for being here!
Yes, I agree, we don’t always realise just how great we are!
Keep on shining my friend!
S-The Sparkling Budgeteer