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Know How to Calculate Net Worth? Learn Now!

Part of: How Does the Net Worth Planning Process Work?

Calculation of net worth can be done with a variety of tools.  Though many tools exist, they all must involve the essential concept of subtracting liabilities from assets.

These tools include a simple worksheet, an online calculator, a spreadsheet based calculator or a personal finance computer program to name a few.  More complicated calculators exist for individuals with more complex financial situations, i.e. business owners or those with extensive assets. [Read more…] about Know How to Calculate Net Worth? Learn Now!

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How Does the Net Worth Planning Process Work?

Net worth is determined by subtracting your liabilities from your assets. The product is a real assessment of your current financial situation.  Net worth and cash flow are the cumulative result of all financial decisions that we make. The net worth calculation provides a wealth of information that can be used to establish goals and develop a planning strategy.  Below is an overview of the planning process. [Read more…] about How Does the Net Worth Planning Process Work?

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How to Develop and Use a Net Worth Plan

Part of: How Does the Net Worth Planning Process Work?

Net worth can be positive or negative.  Negative net worth is not necessarily bad.  Many families begin their adult lives with negative net worth. Conversely, positive net worth does not necessarily mean that the family is “set” and finished planning.  The calculation of net worth and establishment of goals provides us with the framework with which to develop our plan. A variety of tools can be used in developing the plan. [Read more…] about How to Develop and Use a Net Worth Plan

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What is Net Worth?

Net worth is a valuable tool for analyzing your current financial situation, setting realistic goals and measuring progress along the way.  Essentially, net worth is a measure of all of your assets minus your liabilities. Net worth can either be positive or negative. A negative net worth in early adulthood is common.  Once your initial net worth statement is developed, updates and reassessment are relatively easy. [Read more…] about What is Net Worth?

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What is Cash Flow?

Cash flow is arguably the most valuable money management tool. It is used in concert with net wealth and balance sheets to develop a successful money management planning strategy.  Budgeting, systematic savings, debt payments are all part of our cash flow.

Cash flow is a comparison of money in versus money out.  If net worth is to grow, money in must be higher than money out.  Though simple in principle, this is seems to be difficult in practice.  For example, the concept of “burn more calories than you take in” is simple concept as well, though as a society we seem to have just as much trouble with it. [Read more…] about What is Cash Flow?