Today we're talking about the single most important metric in your personal financial
life net worth.
Stay tuned!
Welcome back to WhiteBoard Finance.
My name is Marko and I'm here to help you master your money and build your wealth.
Today we're talking about the single most important metric in your personal financial
life and that is called net worth.
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Let's get into it.
So what is net worth?
Net worth is simply how much you own versus how much you owe.
Otherwise known as assets minus liabilities.
Tracking your net worth is important because it's similar to tracking a diet.
You want to look at how many calories you have coming in versus how many calories are
coming out.
It's the same way with tracking your net worth.
You're counting the dollars that are coming in buying new assets minus the dollars that
are going out due to liabilities.
Tracking is important because it drives future financial decisions to hopefully increase
your net worth not decrease it meaning you're increasing your assets and decreasing your
liabilities.
So how do you calculate net worth if you remember me mentioning earlier.
It's simply your assets minus your liabilities.
So what we do is you make a column full of assets.
So this could be if you own your car outright.
This could be any money in a checking account.
And the money in a 401k etc.
Anything that you own and don't owe anything on is considered an asset.
And then you have liabilities.
So these can be loans that could be a student loan.
It could be a personal loan.
It could be your mortgage.
If you owe money on your home that is not an asset that is a liability because you're
paying off a mortgage every month.
So all you do is you add up all your assets down here you add up all your liabilities
down here.
You subtract the two and that number right here.
Is your net worth.
So it's a very simple equation but it sounds intimidating if you've never tried to find
out your net worth before.
So I hope this makes it a little bit easier.
So what if your net worth is negative.
There's nothing to worry about depending on what stage of life you're in.
Life happens to everybody.
As I mentioned in a lot of my videos because it's true.
A good example would be if you're young in life say you're just graduated and you just
got your new job.
You may not have had enough time to accumulate enough money or assets versus your student
loans that you may have so you could be in a negative net worth if you're in middle of
life.
You could potentially have a new house or a big mortgage.
So even though you own your cars outright and you have a lot of assets the big mortgage
could be weighing negatively on the liability side putting you in the red.
Or you can simply be an over borrower.
This is someone who earns sufficient income but they just keep spending and spending and
spending and now they're in the red.
They have a negative net worth.
So if you want to learn more about saving money every month check out my other videos.
I'll leave them in the description below.
I have a couple of videos and saving money every month and also how to pay down debt.
This will ultimately help you get in the green and outweigh those liabilities with your good
assets.
Those are pretty simple wasn't it.
The final point that I want to touch on is how often you should calculate your net worth.
Some people like to do it monthly.
Some people that are very anal like to do it weekly.
I stick to a quarterly schedule.
This gives me three months to actually see if there's any big adjustments whether I took
out a loan or if I paid off a large loan typically things don't happen in my life that quickly.
So I stick to a quarterly schedule every three months.
It keeps it a lot more organized and it's a lot easier to manage in the long run.
And conclusion I just wanted to say that tracking your net worth shouldn't be used to keep up
with the Joneses or to compare yourself with other people.
That is probably the worst way to use your net worth calculations.
Finding out your net worth is simply like keeping track of your diet.
Again it's like calories in versus calories out.
You want to make sure that you get that personal net worth nice fat.
That way you can survive any cold winters.
And I just came up with that on the spot and that's pretty freaking good.
If you ask me.
So all joking aside guys keep your wallet fat build your wealth.
Answer the question of the day below.
I want to know if you're happy with your current net worth or are you indifferent or are you
unhappy with it.
If so what are you going to do to change that.
Again if you've got any value out of this video whatsoever please comment like subscribe
below.
It really helps you guys.
I put a lot of time and effort into these videos and I would really appreciate it.
Thank you and have a prosperous day.
I'll show you my net worth if you show me yours.