Personal Net Worth
I read a book titled "Automatic Wealth" by Michael Masterson (NLB Call No.: 332.02401 MAS-[BIZ]) recently. I find the book quite practical judging from what is written, unlike some other authors with more than 1 dad.
Of the 6 steps it recommends to financial independence, one of them involves calculating your net worth. I'm sure most of you smarts guys know it by now. The formula for net worth is
Net Worth = Net Assets - Net Liabilities
Net Asset include everything that you have in your banks, insurance products, stocks, bonds, mutual funds etc. Whenever there is a discrepancy between the value of the item, take the lower value for a more conservative estimate.
Net Liabilities would be any debts which you have to service at the moment. This will encompass any housing loans you have taken or credit card debts which are still unpaid. For me, the only liability I have at the moment is my tuition fees at the university. Living with my parents means that I have no housing loans as of yet. Credit cards are good ideas when approriated correctly, but being a full time student means that banks will not let me sign up for one.
I wasn't very surprised when I calculated that I have an negative net worth. The tuition fee is a really big component. But I am determined to increase my net worth every month I check the balance sheet. I will do this my means of prudent saving, stocks investing and probably housing investments when I reach a critical value. Foreign currencies is also another avenue. I will also keep my eyes open for any possible income-generating ideas.
However, through some exposure with the local stock market, I know that I am very conservative in my investments. Hence, I do not think I will put money in places where I think there is high risk, no returns.
On a side note, I found an abandoned supermarket trolley on my way there yesterday. So I decided to wheel it back and add $1 to my current net worth!
Of the 6 steps it recommends to financial independence, one of them involves calculating your net worth. I'm sure most of you smarts guys know it by now. The formula for net worth is
Net Worth = Net Assets - Net Liabilities
Net Asset include everything that you have in your banks, insurance products, stocks, bonds, mutual funds etc. Whenever there is a discrepancy between the value of the item, take the lower value for a more conservative estimate.
Net Liabilities would be any debts which you have to service at the moment. This will encompass any housing loans you have taken or credit card debts which are still unpaid. For me, the only liability I have at the moment is my tuition fees at the university. Living with my parents means that I have no housing loans as of yet. Credit cards are good ideas when approriated correctly, but being a full time student means that banks will not let me sign up for one.
I wasn't very surprised when I calculated that I have an negative net worth. The tuition fee is a really big component. But I am determined to increase my net worth every month I check the balance sheet. I will do this my means of prudent saving, stocks investing and probably housing investments when I reach a critical value. Foreign currencies is also another avenue. I will also keep my eyes open for any possible income-generating ideas.
However, through some exposure with the local stock market, I know that I am very conservative in my investments. Hence, I do not think I will put money in places where I think there is high risk, no returns.
On a side note, I found an abandoned supermarket trolley on my way there yesterday. So I decided to wheel it back and add $1 to my current net worth!
Labels: Self Analysis
posted by thelonetraveller at
12:49 pm
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