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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Net Worth = Assets - Liabilities
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....
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...
Know Your Net Worth
Net worth is what would be left if you were to sell everything you own and pay what you owe. If you have a positive net worth, continue working to increase your net worth, but if you have a negative net worth, analyze your budget and plan how to increase it.
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