It can help you to determine when you are and how to get where you want to be.<ul><li>You can identify areas where you spend too much money. Do you need it or merely want it?</li><li>Pay Down Debt. You can develop a plan for paying down debt.</li><li>Your net worth figures can motivate you to save and invest money.</li></ul>

Know Your Net Worth

Your net worth gives an overview of your financial situation at this point. It is the difference between what you own and what you owe.Your net worth is positive if your assets exceed your liabilities.A negative net worth is when your liabilities are greater than your assets.

Net Worth = Assets - Liabilities

Determine your target net worth - where you want to be in the near-term and long-term future. The following formula is helpful:Target Net Worth=[Your Age−25]∗[1/5∗Gross Annual Income]A 50-year-old with a gross annual income of $75,000 might aim for a net worth of $375,000 ([50 - 25 = 25] x [$75,000 ÷ 5 = $15,000]) Your net worth can be much more or much less than the amount indicated by the guideline.

Find your ideal

Assets are anything of value that you own that can be converted into cash. Examples include:<ul><li>Investments</li><li>Bank and brokerage accounts</li><li>Retirement funds</li><li>Real estate</li><li>Personal property: vehicles, jewellery and collectables.</li><li>Cash</li></ul>Your liabilities represent your debts, such as loans, mortgages, credit card debt, medical bills and student loans.

Calculating your assets and liabilities

Your net worth is the amount by which your assets exceed your liabilities. In simple terms, net worth is the difference between what you own and what you owe. If your assets exceed your liabilities, you have a positive net worth. Conversely, if your liabilities are greater than your assets, you have a negative net worth.

Know Your Net Worth

Why Knowing Your Net Worth Is Important

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