What does your “net worth” mean? What it is and how to determine it

Do you know what your net worth is? Today I’ll show you what “net worth” really means, what it doesn’t mean, and how to use this information to grow your finances.

Because that’s what we’re in business to do, right?

Now, let’s get into some simple definitions.

Your “net worth” is simply your assets minus your liabilities.

We’re talking about assets in terms of what you have in savings, retirement, investments, and things you own free and clear. Per Investopedia, an asset is anything, tangible or intangible, “that has monetary value that produces income to its owner, or could produce income if used or sold.”

Liabilities, on the other hand, are “something that a person or company owes, usually a sum of money.” This could include things like loans, mortgages, or other types of debt.

Simplest of terms? Your net worth is the assets minus the liabilities, or what you have minus what you owe.

You want your net worth to be positive. And sometimes it’s negative, which happens to all of us from time to time. But the goal is to keep it on the positive side.

That starts with taking inventory of your savings and investments.

So here’s my 5-minute financial challenge for you today: take a look at your savings and investments, and write them all down. You can use pen and paper, an Excel spreadsheet, even glitter and crayons if you like!

But the point is simply to see where you stand with your current savings and investments, and assets, and compare them against your liabilites.

Because in order to know where you want to go with your money, you need to know where you stand NOW. That’s where this exercise comes in.

So open up your savings account. Take a look at your investments. If you have retirement accounts or life insurance, get those out too. Gather all your assets together and assess where you are.

Now, when you have everything available, simply look at them, and reflect on where you stand now. Reflect on the thoughts and feelings that come up. No judgment, just notice.

Then, write it all down in your journal.

Finally, gather up your liabilities, and do the same thing. Loans, mortgages, debt…look at it all, and then compare it against your assets.

Once again, just like with your assets, look out for any thoughts and feelings that come up when you explore your liabilities. Take note of what you’re feeling, and write it down in your journal.

Pro Tip: If you’re feeling any shame around your debt, that’s OK! Here I share one of my favorite exercises to help release any debt shame you might have, so you can move on and make the changes you desire.

Finding your net worth doesn’t have to be complicated. You don’t have to have an accounting degree to figure it out. Just get out all your info, grab a calculator, and get started.

In the video below, I walk you through this simple process and add in some extra tips and tricks to make it even simpler, plus I share some of my favorite apps and tools to help keep track of your numbers.

Watch that right HERE!

Remember, as always, to get where you want to go, you have to know where you are now. This is where your assets and liabilities inventory comes in.

It’s the perfect time to gather your data, take inventory of what you have, and also take inventory of your thoughts and feelings. From there, it’s a beautiful moment to start creating abundance.

That means tapping into the gratitude and abundance space, from which you can create any financial future you desire.

So give this simple exercise a try, and get ready to create your path to financial freedom, one step at a time!

How did this work for you? I’d love to hear about it. Leave me any questions or comments about net worth right here, and I’ll answer them as best as I can for you!

Until Next Time,

Love, Light, and MONEY, Honey…

Kaylee

P.S. Want to shift your net worth to a more positive place? Your relationship with money and how you manage it is a BIG factor. But how do you really manage your money? My simple quiz will tell you all you need to know about your Money Management Personality!

Take the quiz here and get valuable insight on how you really manage money. You’ll discover your strengths and where a few shifts are in order…

Find out HERE!