Today we are going to talk about Knowing Your Number, or your net worth.
Your net worth is simply everything you own minus what you owe.
And although the concept is pretty simple, a lot of people don’t take the time to fully understand where they are financially. And let’s be honest, we can’t get to where we want to go, unless we know where we currently are.
The first step in understanding where your money is now is to create a net worth statement. It may sound complicated, but all you need to do is to list all of your assets, or everything you own, and all of your liabilities-everything you owe, or your debt.
Here’s a tip-If you have credit card debt, don’t forget to include your interest rate as well as the principal of what you owe.
You can use good old-fashioned pencil and paper, or there are plenty of spreadsheets online that you can download from websites like mint.com or programs like quicken. You can also reach out to me and I’m happy to share the net worth statement that I use with my own clients.
I recommend updating your net worth statement 1-2 times a year, and if you have a partner or spouse, consider doing this together, especially if you have joint accounts.
It can be scary to face how much we owe, and your net worth may even be negative when you begin-that’s ok!
It’s a good starting point for facing the facts, and then developing and tackling a plan for eliminating debt.
If you would like help creating a net worth statement, or reviewing one you have already started working on, please reach out to me so that I can help!
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