Net worth is the total wealth of an individual, company, or household, taking into account all financial assets and liabilities. Don’t ignore calculating net worth because it determines your financial condition. Net worth provides an idea of where you are in the financial journey and what you should do to achieve your goals. You could take the help of a net worth calculator online to ascertain your net worth.
What does net worth mean?
Net worth is the value of the assets that one owns after subtracting their liabilities. It is a significant metric because net worth provides a helpful snapshot of your financial position currently.
What are the key takeaways of net worth?
- Net worth is a quantitative concept. It measures the value of an individual and even corporations
- Net worth serves as a snapshot of your current financial position
- Those with substantial net worth are called high network individuals (HNIs)
- Positive net worth means you have more assets than your debts.
- One can calculate their net worth using a net worth calculator
What is a net worth calculator?
Net worth calculators aid you in modifying your mutual fund investment portfolio according to your financial objectives. You can deduce your liquid net worth with the help of these calculators. Liquid net worth can help in the creation of cash reserves.
How is net worth calculated?
Here is how to calculate your net worth using a net worth calculator:
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Type in what you own:
List down the estimate of your assets. Your bank balance, bonds, property, and mutual fund investments fall under assets.
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Type in what you owe:
Next, write down the amount you owe to repay on home loans, credit card loans, remaining premiums, and personal loans.
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Then, calculate the difference:
The difference between the assets and debts is your current financial net worth. You may be discouraged by a probable negative net worth result because of loans when you are a young professional. However, you could change that. You can take some steps towards a positive net worth.
How can you increase your net worth?
Below are a few tips for increasing net worth:
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Reducing debts:
Revisit your loans and confirm if you can pay a higher EMI. You could also opt to prepay the debt to save money.
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Bring down expenses:
Keep a tab on your monthly expenditures. Examining and scrutinising your spending can help you determine avoidable spending and take steps to curb them. Self-control will ultimately help in increasing your savings and net worth. You can also save money by reducing expenditures and making smart investment choices.
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Investing smartly:
Just deposing your monthly income in the bank is not enough. Spread your investments, i.e., diversify them to a wide range of assets like debt mutual funds, property, and equity funds. Diversification protects you against losses if any asset underperforms. Reach out to a financial planner or an expert if you do not know how to diversify.
Why should you calculate your net worth?
You must calculate your net worth annually to evaluate your finances. A high net worth ensures that you need not worry about your finances. What are you waiting for? Use an online net worth calculator as soon as you can!
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