As you begin on your wealth-building journey it will be important to know your net worth.
By knowing your net worth you will begin to focus on how you spend your money, including appreciating assets or depreciating assets.
What is Net Worth? Your net worth is calculated by adding up all of your assets and subtracting your liabilities.
Some examples of appreciating assets are; homes, stocks, bonds, mutual funds, ETF's and Money Market funds.
Examples of depreciating assets are vehicles, motorcycles, recreational vehicles. It may appear that your vehicle is an asset, which it is, but it is a depreciating asset, meaning it will become worth less money over time.
Focus on appreciating assets that grow in value over time, unlike depreciating assets that lose value over time.
Sample Net Worth:
Home Value: $300,000
Car Value: $15,000 (depreciating asset)
Money Market Fund $500.00
Total Assets - $316,500.00
Home Mortgage: $200,000
Car Loan: $10,000
Credit Cards: $5,000
Total Liabilities - $215,000
Net Worth - $101,500
Begin now and update your net worth every six months.