I went around the other day asking some of my friends if they knew what ‘net worth’ meant. I realized something after hearing their definitions… I need to get new friends. They didn’t have the slightest clue. Seriously people, no clue? Your net worth is really important.
If you are serious about getting your financial life in order, you already know what your net worth is and how to calculate it. If you’re a financial infant, than you probably don’t so let me explain via this super technical formula….
If you don’t know what your net worth is right now, I’d encourage you to take a minute to figure it out (you can even use this calculator to help). After you’ve got it calculated, you can then compare your worth to the rest of America….
Wanna know something? Your net worth TODAY isn’t really that big of a deal. You can’t change the past, but you sure can change your future. The most important thing about your net worth is tracking it. If you don’t update your net worth at least once a year (I do mine every month), you’re a big fat stupid head. Yeah, that’s right… a stupid head!
Sometimes you can’t really control the fluctuation in your net worth (like if you own a home and it temporarily depreciates or if the stock market is having a bad month), but there are two general rules.
1) If you’re net worth goes up each month, that is AWESOME.
2) If your net worth is spiraling downward, you may have some BIG problems.
So remember, when it comes to your net worth, it’s not your current number that matters. It’s where your worth is going (hopefully up) that’s important.
Questions for my beautiful readers…
What is your net worth? (Mine is $41K)
How long have you been tracking it? (2 years)
Is it generally moving up?
If you haven’t calculated it before why not?