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What’s Net Worth?

Female programmer working on desktop computer

Are you ready for an exciting lesson?

Don’t you just love these guys who make these books trying to sell something? They’re all hyped up on who knows what and make it seem like whatever junk they are promoting is the greatest thing on the face of the Earth. “I’m so excited! Thank you for coming here! I have this absolutely amazing, game changing, epic, mind blowing product that will radically change your life. I’m so excited about this product! My blood pressure is going through the roof and I’m going into cardiac arrest, but before I do, let me tell you about, uh, let me see what kind of crap I’m selling today. . .”

Okay, so this is not one of those Red Bull, Ritalin-infused commercials trying to sell you the latest and greatest new thing. What I have to show you is much more exciting because it truly is a game changer and could radically improve your life. I’m not selling you anything here. It’s all legit. I promise.

Attention is important, but what’s more important is focusing our attention on the right things. Here is the first thing you should focus on:

Net Worth. Your net worth is simple. It adds up all the stuff you own and subtracts all the stuff you owe.

This quickly tells you how much you are worth at that moment. It’s a snapshot in time that shows how much cash you’d have if you sold everything you own and paid off all your debts. Your net worth is an important number. You want your net worth to increase over time so your assets go up and your liabilities go down. The higher your net worth, the greater your financial security. Your net worth is your financial score. It tells you how you’ve done and where you currently stand.

You can calculate your net worth yourself fairly easily. You just need to make a list of all your assets and liabilities and then update the figures to track it over time. Of course, there are software pro- grams, websites, and mobile apps that can do this for you as well. It doesn’t really matter how you calculate your net worth; it just matters that you are calculating it on a regular basis. I suggest at least twice a year.

The proceeding blog post is an excerpt from Get Money Smart: Simple Lessons to Kickstart Your Financial Confidence & Grow Your Wealth, available now on Amazon.

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