I would like to share with you how to calculate and track your net worth. This is one of the most important finance rituals that you can have for your life.
How will you ever know if you are getting ahead financially if you have no way of tracking your wealth?
I first started engaging in this ritual in my early 20’s, when I would track and update my net worth every 3 months. Today, I track it every 6-12 months. I have come to understand that my net worth is the most important number when it comes down to my financial wealth and abundance.
Theoretically, your net worth is what you would have in cash if you sold every significant possession and paid off all of your debts.
If your net worth is a negative number, don’t worry. You aren’t alone. All that matters is that you take action and start making better financial moves.
In the words of Benjamin Franklin, “Your net worth to the world is usually determined by what remains after your bad habits are subtracted by your good ones.”
Watch the video below:
(Click here to watch on YouTube)
[smart_track_player url=”http://www.buzzsprout.com/9299/553715-plm-461-how-to-calculate-and-track-your-net-worth.mp3″ background=”default” ]
Do you want to learn how to master your finances? CLICK HERE to join my Life Mastery Accelerator program!
It’s not about how much money that you make, but rather how much money that you get to keep AND what you choose to do with that money, in terms of accumulating assets and building up your net worth.
A great example of someone who has effectively mastered the investment game is Warren Buffett. Known to be worth $75 billion dollars, he is one of the most successful self-made investors in the world.
At the age of 11, he used cash from his paper route to buy farmland. At 15 years of age, he already had a net worth of $6000.
I believe that while we should all strive to make more money, that doesn’t necessarily mean that we are worth a lot of money. For example, you could make one million dollars per year, but you could also be spending all that money in one year. If you adopt this behaviour pattern, you will never get ahead in life.
The goal is to accumulate assets that can then provide a passive income source for you, which will continue to grow as you move throughout your life. If you take this path, you will achieve financial freedom.
I see a lot of people who work their entire lives, but have nothing to show for it. Make money, but make sure that you do something with it. If you don’t currently know how to manage your finances, then making money isn’t going to help you.
Your net worth is your assets minus your liabilities. Your assets are what you own and your liabilities are what you owe.
You want to focus on accumulating more assets. Go through all of your assets. Examples may be cash, a business, or investments like stocks, mutual funds, or real estate.
Calculate where you currently are for each of your assets, and then add all of them together. Keep in mind that your final number isn’t your net worth because you also need to take into account any liabilities that you may have.
For example, you may have a student loan, a line of credit, a car loan, or a mortgage. Calculate those liabilities and come up with a final number.
In order to determine your net worth, you would take your assets and subtract it by your liabilities. Ideally, you want to accumulate more assets over time and reduce your liabilities.
Watch my YouTube video above to see how to calculate and track your net worth using an excel spreadsheet!
When you go through the process of calculating and tracking your net worth, you may realize that you need to cut out some of your expenses and change your lifestyle. Being smart and taking these steps is what will determine your financial wealth, more than anything else.
This is how to calculate and track your net worth. The more that you measure something, the easier it becomes to manage it. I challenge you to create a ritual around financial wealth and abundance and make it a priority every day.
As part of my monthly Life Mastery Accelerator program, I have a live training session coming up in the next few weeks where I’m going to dive deeper into how you can manage your money more effectively.
I will also share some of the strategies that I employ in my life when it comes to creating financial wealth and abundance. A lot of people are great at making money, but they don’t know how to invest it, and that is what I teach people how to do.
I believe that financial freedom begins with a change of your mindset. Calculating and tracking your net worth is one of the most important steps that you can take in order to improve your finances.
T. Harv Eker said it best, “Focus on all four of your net worth factors – increasing your income, increasing your savings, increasing your investment returns, and decreasing your cost of living by simplifying your lifestyle.” The result? Financial freedom and abundance.
Do you want to learn how to master your finances? CLICK HERE to join my Life Mastery Accelerator program!