What’s your net worth?

How to set up a personal net worth statement.
List your assets (what you own), estimate the value of each, and add up the total. Include items such as: …
List your liabilities (what you owe) and add up the outstanding balances. …
Subtract your liabilities from your assets to determine your personal net worth.

Net worth is a measure of your financial health because it basically says what you would have left over if you sold all of your assets to pay off all of your liabilities. Every financial move you make should be aimed at increasing your net worth. This means either increasing assets, or decreasing liabilities.

Appearance therefore is not a reliable sign of financial health. A person on the point of total financial collapse can look very flashy and good. While Warren Buffett if you meet him on the street or shopping in Wal-Mart wouldn’t stand out on the basis of his flash because he doesn’t believe in using his wealth in useless ways. But who’s wealthier?

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