Principle 6 states, “know your net worth including the value of your business, because you can’t improve what you don’t measure.” An important part of financial well-being is knowing what you owe, what your business is worth, and knowing the value of your assets. Tracking your net worth is an important measure of personal wealth, as any successful business owner will tell you.
6 Reasons You Should Know Your Net Worth and How to Calculate It
Net worth is probably the single most important measure of personal wealth, which is why knowing your net worth is so important. This is particularly true if your plan is to increase your wealth in order to achieve financial independence and reach retirement. But what is it exactly and how do you calculate it?
What Does Your Net Worth Really Mean?
One of the most useful calculations a person can make when it comes to their personal finances is to figure out their net worth. The actual calculation of net worth is really simple. You just add up the value of all of the things that you own – the value of your home, the value of your cars, the value of your savings accounts and investment accounts and retirement accounts – and subtract from that the value of all of your debts.
Everything You Need to Know to Maximize Your Net Worth
When you hear the term “net worth,” they probably conjure up images of oil tycoons and Wall Street bigwigs—you know, those folks who have more money than many third-world countries. But tracking net worth shouldn’t stay relegated to the realm of billionaires because the concept actually has nothing to do with gratuitous wealth.