Chris Worby is a Trusted Regina financial advisor and Wealth Management services provider. With over 20 years of experience, Worby Wealth Management is committed to providing a high standard of financial and wealth management services to individuals, families and business owners in Regina. Worby Wealth Management listens and delivers a personalized financial plan. In his latest Worby Wealth Blog Post, Chris Worby asks you to consider Your Financial Health. A Guide to Calculating Your True Net Worth
How Good Is Your Financial Health? A Guide to Calculating Your True Net Worth
Understanding your financial health goes beyond checking your bank account balance. One of the most comprehensive ways to assess your financial well-being is by calculating your true net worth. In this blog post, we’ll delve into the importance of knowing your net worth, explain how to calculate it, and discuss why this figure is a key indicator of your overall financial stability.
Why Calculate Your Net Worth?
Your net worth is a snapshot of your financial situation, representing the difference between your assets and liabilities. It’s a powerful tool that helps you gauge your progress toward financial goals, identify areas for improvement, and make informed decisions about budgeting, investments, and debt management.
Calculating Your True Net Worth
Identify Your Assets:
Start by listing all your assets, including:
– Cash and savings accounts
– Investments (stocks, bonds, retirement accounts)
– Real estate (home, rental properties)
– Vehicles
– Personal property (jewelry, art, collectibles)
Determine the Value of Each Asset:
Assign a realistic market value to each asset. For cash and investments, use current balances. Consider obtaining a professional appraisal or using online tools to estimate market values for real estate.
List Your Liabilities:
Outline all your liabilities or debts, such as:
– Mortgage
– Car loans
– Credit card balances
– Student loans
– Other outstanding debts
Determine the Outstanding Balances:
Note the current balances of your liabilities. This gives you an accurate picture of your financial obligations.
Calculate Your Net Worth:
Subtract your total liabilities from your total assets to determine your net worth.
\[ Net Worth = (Assets – Liabilities) \]
Understanding the Results
Positive Net Worth:
If your assets exceed your liabilities, you have a positive net worth. This indicates financial stability and suggests that you are building wealth.
Negative Net Worth:
If your liabilities outweigh your assets, you have a negative net worth. This signifies that you owe more than you own. While it may be a red flag, addressing and working towards turning the situation around is essential.
Increasing Net Worth:
Regularly calculating your net worth allows you to track your financial progress. An increasing net worth over time indicates positive financial habits, such as saving, investing, and debt reduction.
Factors Influencing Net Worth:
Events like home purchases, investments, or paying off debts can significantly impact your net worth. Understanding these factors helps you make informed financial decisions.
Calculating your true net worth provides a holistic view of your financial health. It serves as a roadmap for your financial journey, helping you make informed decisions, set realistic goals, and measure your progress. Regularly revisiting and recalculating your net worth allows you to adapt to changing circumstances and ensures that your financial strategies align with your long-term objectives. Remember, knowledge is power, and understanding your net worth is crucial to achieving financial success
Contact Worby Wealth Management Regina so we can review your net worth and your personal plan!
TRUSTED REGINA FINANCIAL ADVISOR Chris Worby from Worby Wealth Management helps you live your dream!
The comments contained herein are a general discussion of specific issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice in the context of your particular circumstances. This Blog was written, designed and produced by Chris Worby for the benefit of Chris Worby, a Financial Advisor at Worby Wealth Management, a registered trade name with Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia Financial Services Inc. The information contained in this article comes from sources we believe are reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the publication date and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any securities. Mutual Funds approved exempt market products and exchange-traded funds are offered through Investia Financial Services Inc.