Managing personal finance
What Is Your Net Worth?
Net worth is the simplest way to check where you stand: what you have minus what you owe.
Welcome to chapter 2!
In this lesson, we will talk about net worth. Net worth sounds like a finance term but it's really simple - it is just:
what you have - what you owe
"What you have" (also called "Assets") can include money in the bank, investments, pension, and maybe your house and car(s).
"What you owe" (also called "Liabilities") can include credit cards, student loan, car loan, mortgage and any other major debts.
Once you put those numbers in one place, it becomes clear where you stand. It is a number that, once you sold everything you own and pay back everything you owe, that is the money you're left with.
Key takeaways
- 1Net worth gives you a starting point. You can see where you are right now and how prepared you are with retirement.
A quick example
Let's see this in numbers
Say Mei has:
- $20,000 across her bank accounts
- $45,000 in 401k or pension sceheme.
- $15,000 worth of a car
- $10,000 in investments
And she still owes:
- $12,000 on her car
- $3,000 on her credit card
Her total assets are $90,000. Her total liabilities are $15,000. So her net worth is $75,000.
Build your balance sheet
List what you own and what you owe
Your inputs are private and are not saved to your ActuaPlan account.
Assets
$0
Liabilities
$0
Net worth
$0
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How Much Do You Need to Save?
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