01 Apr Knowing your net worth!
Being in the twenty-first century, we understand how expensive the world has become. If your annual income is not more than six lakhs or something, it is an alarming moment for you to sit and calculate your net worth to see what lies in your future. It gives you a clear idea of what exactly is your worth and keeps you in a state where you can think further and get an idea where you must now invest and where you must cut down your expenses and start saving. Understanding the net worth is quite simple. You must keep an account of what you own and what you owe. It is a clean play of assets minus debts. Assets include everything worthy you own, be it a house, car, antiques, art collection, cash or anything else while the liabilities include what you owe on these assets, like the mortgage or the credit card bills, loans on the house and credit cards bills. When you make an account of both and minus the debts from the assets, you get your worth, and that shows what you own and, on these bases, what should be your plans.
It gets even more critical with time when you get to know what are recent trends with the finances and shows you where correctly are you doing good and increasing your worth and where you can do even better. It is a fact that your net worth will eventually grow with the hikes you would get, and the debts you would pay. When the property rates will go higher to what you invested, and with the opportunities, you would get to spend in the right place.
When it comes to younger people, they usually have the lesser net worth and sometimes even in the negative which quite a rational being in the phase where you make early investments and wait for the paybacks with the time. Many people have limited earnings, and therefore it takes time to pay back the debts one own, and hence the harmful net wort becomes more natural. It just means you owe more than what you own. The biggest culprit of the majority people’s negative net worth is the student loan they took to complete their education which takes ages of interests and payments to get done with the debts. The negative net worth not always means you have been irresponsible and spent more than what you should have had, it just means you now have to careful with what you spend to get your personal finance back on track as soon as possible. The sooner you pay your debts, the early you can make the profits.