Calculate the net

Have you ever heard of wealthy people who are described as 'worth X (amount of dollars)'? Maybe, this celebrity is worth 5 million dollars, or that the heir is worth 35 million dollars. This is called their net worth, and believe it or not, we all have one. Some people have a 0 in equity or negative equity, but it's still their net worth. Knowing the equity may be useful from time to time when filling out some financial forms or when planning your finances.

The equity is equal to total resources less total liabilities. To begin, you add up all your resources. You might be surprised at how many resources you have. The obvious is your home and investment including any retirement accounts like 401K or IRA, stocks, bonds, mutual funds, commodities and real estate. Your vehicles are also activities, but be sure to include only their fair market value. In other words, if you were to sell today, because you might get? Some other activities include high-value items such as antiques, collectibles, art and precious.

Next, you need to calculate all your responsibilities, simple or debit card, the money you owe. This includes the amount due on your mortgage and vehicles, the one who has to pay for items financed, such as computers and other objects of high prices, from credit cards, student loans, and absolutely any other debt you owe. A liability means that they are held accountable to those who have borrowed money. This money is not your reason for which is subtracted from your assets.

Finally, subtract. Assets minus liabilities equal net worth. In other words, you have to subtract from what you have and you get what your worth, your net worth. Understanding the equity is a good way to see where you are financially in your life so you can set goals and make a plan of action. If the equity is a negative number, this means they are badly in debt. Even if you get a number close to zero, you're still nowhere near where it should be for retirement. You can not live off Social Security alone unless you do not mind how you are living now considerably downgraded.

Take your net worth as a starting point. If you have a net worth of $ 100,000 or more and you are under 30, you have a good start. Keep saving and investing your money so that they are least able to maintain your standard of living when you retire. If you have an equal net value and are much older, you may need to be a bit 'more aggressive in your savings, but not so aggressive in your investments to avoid losing money. Let your equity now be a starting point for the large nest egg in your future....