Calculating net worth is a touchy subject
Some people love doing it, some people hate facing the reality of what it is but regardless of your stance, it is a really important exercise to do to get a clear view of where you currently stand financially and it helps you create a plan of attack to get your net worth numbers up.
How do I calculate my net worth?
Your net worth is calculated by subtracting your liabilities from your assets.
Net worth = Assets - Liabilities
Many people start out with a negative net worth and if this is you, it's ok. Given time and the continuous of practice good financial habits, this can change.
A negative net worth can be due the fact that you haven't earned / invested enough of your income to offset your debt. For example, it is not uncommon for younger people who have student loans but have only earned a few years of income to have a negative net worth.
Another reason for a negative net worth could be due to over spending and having large amounts of credit card debt and not much assets to offset your debt.
How do I increase my net worth?
Every time you make a payment towards debt or you put money in your savings account, you are increasing your net worth. Even if it is negative, when you make a debt payment you reduce your total amount of debt which in turn increases your net worth.
Your challenge this week is to use the downloadable worksheet on this page to calculate your current net worth.
Don't be afraid or discouraged by what you see if you end up with a negative number.
Remember the whole point of this journey is to work on your finances! Give yourself time, develop the habits and consistency and most importantly believe that you can.
P.S. Don't forget to share your progress in the Facebook group!
It's week 3 of The 26 week savings challenge!
This week, your savings deposit amount is $11.00
(If you've been consistent with your deposits, this week's deposit will bring your balance to $21!)
- Make your transfer.
- Check off this week's amount on your savings challenge schedule.
- Share your progress in the Facebook group!
Note: This challenge will be on-going throughout this accountability program in addition to your other weekly challenges.