4 reasons you need to know you net worth

What is your Net Worth and why do you care about your worth in monetary terms?

Your Net Worth = Current value of Your Assets MINUS the Current value of Your Debt

Think of your Net Worth as the structure of your financial tree. Your Assets are its trunk.

Debt is either a pair of pruning shears, gently nipping at a branch to help it grow or a hacksaw hindering its health.

It is very easy to happily think about the value of your Assets, especially if they have gone up. It isn't the full picture though.

Here are four reasons you need to understand and know your financial Net Worth:

1. Protecting

Things like credit cards generally result in unplanned and emotional debt. Understanding the impact on long term dreams will help discipline at checkout.

2. Funding

Lenders review your debt when valuing your assets as collateral for future loans.

3. Dreaming

If you are planning to use an Asset to fund a future dream, you need to understand how much is actually available.

4. Planning

Updating your Net Worth number is a prompt to update the values of your Assets and Debt a few times a year. Those reviews can bring you new knowledge and strategies.

Your financial net worth does not tell you who you are but what you have to get you where you want to go.


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