A. How is net worth calculated?
Net worth is the value of an individual’s assets, many values can make up the net worth of a
given individual. As defined in our manual, “Personal Financial Planning”, net worth is “the
value of assets held after creditors’ claims (debts) have been accounted for, or literally, we know
that NET WORTH = TOTAL ASSETS – TOTAL.” (Siegal & Yacht, 2009, p. 46). Taking this
into account, there are a few formulas to keep in mind when evaluating and calculating net
worth. By composing our balance sheet, we have our assets, our debts, and our net worth.
Furthermore, each balance sheet usually measures a reflection of your current financial situation
that can change constantly, so maintaining an up-to-date balance sheet will help you better
understand your financial history from time to time.
B. What is the meaning of the statement that your net worth is the equity you have in your
own life?
The assertion that my net worth is the equity I have in my own life means that my net worth is a
snapshot of my financial situation at some point. It also shows me what I own and owe and if my
assets exceed my liabilities, it means I have a positive net worth. However, if my liabilities are
greater than my assets, I will have a negative net worth. The net worth also provides a wake-up
call if I am completely off track or thumbs up if I do well. Tracking net worth over time helps
provide a meaningful view of my finances (“How to Calculate Net Worth”, 2017).
Reference:
Siegal, R. & Yacht, C. (2009). Personal Finance. Saylor Foundation. Licensed under Creative
Commons CC BY-NC-SA 3.0.
How to Calculate Net Worth. (2017, December 15). Retrieved
from https://www.thesimpledollar.com/financial-wellness/how-to-calculate-your-net-worth/
Net worth is the value of an individual’s assets, many values can make up the net worth of a
given individual. As defined in our manual, “Personal Financial Planning”, net worth is “the
value of assets held after creditors’ claims (debts) have been accounted for, or literally, we know
that NET WORTH = TOTAL ASSETS – TOTAL.” (Siegal & Yacht, 2009, p. 46). Taking this
into account, there are a few formulas to keep in mind when evaluating and calculating net
worth. By composing our balance sheet, we have our assets, our debts, and our net worth.
Furthermore, each balance sheet usually measures a reflection of your current financial situation
that can change constantly, so maintaining an up-to-date balance sheet will help you better
understand your financial history from time to time.
B. What is the meaning of the statement that your net worth is the equity you have in your
own life?
The assertion that my net worth is the equity I have in my own life means that my net worth is a
snapshot of my financial situation at some point. It also shows me what I own and owe and if my
assets exceed my liabilities, it means I have a positive net worth. However, if my liabilities are
greater than my assets, I will have a negative net worth. The net worth also provides a wake-up
call if I am completely off track or thumbs up if I do well. Tracking net worth over time helps
provide a meaningful view of my finances (“How to Calculate Net Worth”, 2017).
Reference:
Siegal, R. & Yacht, C. (2009). Personal Finance. Saylor Foundation. Licensed under Creative
Commons CC BY-NC-SA 3.0.
How to Calculate Net Worth. (2017, December 15). Retrieved
from https://www.thesimpledollar.com/financial-wellness/how-to-calculate-your-net-worth/
