How much are you worth?
Do you ever wonder how much you’re actually worth? It’s often a hot topic when it comes to high profile people and celebrities but how does that apply to you?
The exact same way it applies to them.
What is net worth? To put it simply, it’s your assets (what you own) subtracted by your liabilities (what you owe).
Net worth is a good calculation used by banks and other financial providers to gauge your financial health. Your net worth should grow over time as your assets grow and you start to pay down any debts for those assets. This sometimes isn’t the case though.
Your net worth is important to factor in when making big purchases on things like a house or car. For example, you buy a car that’s worth $20K that you finance. Over time, that value of the car will decrease while the debt to pay off for it also slowly decreases but not at the same rate as the asset value, this can cause for your liability (your debt) to be more expensive then your asset (your car). Meaning your net worth for the car is negative.
Exercise: List down everything that you own with substantial value, this can be your house, the contents within your house, your sharesies portfolio and even your kiwisaver balance.
Then list down everything that you owe, this might be your mortgage, car loan or anything else that you owe.
Now apply this equation: total value of assets - total value of liabilities = Net worth.
Is your net worth positive? If so, well done!
If not, then you may need to see what you can do to reduce your liabilities or the debt on those liabilities.
How does the net worth tracking feature work?
Using our net worth tracking feature is super simple, just like the above exercise you just need to list down your assets and what the value of those assets are. Once you’ve completed that do the same for your liabilities on the section below it.
And that’s it!
At the end of that, you’ll see a nice summary of what your net worth is. The main thing is to update the values at the end of every month. You can see at the top of the screen you can toggle between months so you can track your net worth position each month. This also helps when you want to look back at history as well.
This gives you a good idea on your progression so you can keep track of how your assets are growing and how your liabilities are decreasing.
Just like why we built BudgetBuddie, our mission is to give you more clarity on where you stand now in order to make better financial choices in the future.
Have you registered for when we launch?
Register for when we launch to get early access and special deals and easily get more clarity on your finances. Sign up here.
Final words
Thanks for reading, if you have any feedback or questions on what you've seen so far, feel free to get in touch using our contact form or alternatively give us a bell at hello@budgetbuddie.co.nz
Disclaimer
This blog or any other information provided by BudgetBuddie is not financial advice. If you're needing financial advice please get in touch with a licensed financial advisor or professional.
