Net worth meaning (and why you should know yours) - Deepstash
Net worth meaning (and why you should know yours)

Net worth meaning (and why you should know yours)

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Your net worth

Your net worth

Your net worth is the total value of all your assets, minus all of your liabilities.

It is important to know your net worth so you can calculate how much progress you're making and how close you are to financial independence. Banks and investment advisors use this number to assess your creditworthiness and sophistication as an investor.

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How to calculate net worth

  1. Add up the total valued of your cash and other assets. Items could be cash, stocks, bonds, DCs, 401(k), real estate, the money you're owed. Your goal is to determine how much these assets would be worth if you were to convert them into cash.
  2. Then subtract all your outstanding liabilities, such as credit card balances, student loans, mortgage(s), medical debt, car loans, private loans, payments remaining on a home or car lease.

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Why you should know your net worth

  • Knowing your net worth provides you with an actual state of your finances.
  • It can also tell you how close you are to achieving financial independence.
  • Tracking over time helps you know if you're spending too much month after month.
  • When opening a bank or brokerage account, your net worth will be considered. Knowing up front can help you see whether you're eligible for certain investments.

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