Saturday, November 27, 2010

Net Worth Calculation

Net worth is a measurement of how much you exactly have currently. You can use it to determine how rich or how poor a person at any point of time. To calculate your net worth, you just need to follow three simple steps.

Step 1: Total up everything that you owned including your savings in your bank.
For example:
• Your house (currently valued at $300,000)
• Your car (currently valued at $40,000)
• Your stocks (currently valued at $50,000)
• Your saving (currently at $20,000)
Total: $410,000

Step 2: Total up everything that you owed including all your loans.
For example:
• Your housing loan (currently at $200,000)
• Your car loan (currently at $30,000)
• Your credit card bill (currently at $10,000)
Total: $240,000

Step 3: To calculate your net worth, just use the total for step 1 and minus away the total for step 2.
Using the example for step 1 and 2:
Net worth = $410,000 - $240,000 = $170,000

Please note that the net worth calculation does not involve:
• Passive incomes that you will be getting from your assets
• Future interests that you will be paying for all your loans.

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