What is net worth? Generally it’s a term you hear most commonly when discussing celebrities and millionaires. But everyone has a net worth, and it’s important to understand and know what yours is.
What is Net Worth?
It’s simple! Think of it as your personal balance sheet. Essentially, it’s the value of everything that you own, minus any debts you hold. If you decided today to sell everything you own and pay off all of your debts, the remainder would be your net worth.
To calculate your own, first you need to add up everything you own. This includes money in any checking or savings account, any property you own, and even non-investments like your car. Next, calculate any debt you hold, including things like car loans, medical debt, and student debt. Then find the difference. To make things even simpler, try using this calculator.
Why Is It Important?
Net worth is a huge part of the conversation when you’re planning for your future. Understanding your net worth means understanding where you stand today. To accomplish your financial goals and to guarantee yourself future financial freedom, you have to know where you’re starting.
Think of your net worth as a gauge point for where you are and where you want to be in your life. Establishing a baseline for where you are is essential, but you have to continue checking in to make sure that over time, its growing as expected. It’s also good to know that there can be fluctuations in this number. Sometimes, there may even be a planned change that “shrinks” your net worth.
How To Strategize
Growing your net worth is a long term task as you work your way towards retirement and financial freedom. It’s possible to figure out a plan on your own by setting savings goals and understanding your investments, but doing it with a team may be the better option. Partnering with a professional takes the stress off of your shoulders. It also provides extra reassurance to have a strategy prepared by someone who knows the ins-and-outs of what’s going to help you the most in the long term.
Action Over Fear
We get that sometimes it feels better to live in ignorance that to face where you stand financially. The truth is, no one has ever felt like they started saving too soon. Once you know your net worth, you can’t unlearn it – but you can change it. If you feel like it’s too late, release that fear and guilt and do something to fix it moving forward.
Time is your biggest asset. The sooner you talk about where you are and where you need to go, the easier it will be to get there. Prioritize your financial freedom. Rip the bandaid off and find a team that can help you plan for your future. If you think Encurio may be that team, try setting a meeting with us.