Periodically calculating your net worth — the value of your assets minus your liabilities — is the best way to measure and track your financial health.
Knowing your net worth is extremely valuable because it may help you make important financial decisions, avoid financial distress, plan for retirement, and address various other financial management issues.
It is important to remember that proper categorization of your Assets and Liabilities to determine your Net Worth can be made easier by utilizing the free financial management tools available at settleitsoft.com. Aside from housing a powerful, intuitive debt negotiation platform, this comprehensive Web-based software also helps you organize and store your bills, allows timely payment remittance, and provides cloud storage for the safekeeping of and 24/7 access to copies of your crucial documents.
While not necessarily pertinent to settling debts, entering accurate asset and liability information will provide the best utilization of the power of SettleiTsoft® with easy to use tools and comprehensive graphs to assist you in budgeting and financial planning.
Once you’ve gathered all the information about your assets and liabilities, you may find the next part easy: simply add up all the amounts listed under assets and then add up all the amounts listed under liabilities. Finally, subtract the total liabilities from the total assets. The result is your Net Worth.
As Simple as this Calculation is, Take it with a Grain of Salt.
This single number doesn’t paint an accurate picture of your whole financial situation. For instance, if you’re a recent college grad and are just starting to pay off hefty student loans, a very negative net worth is expected and doesn’t necessarily reflect badly on your finances. However, it does mean that to realize financial goals soon, you’ll have to work to pay off those debts quickly.
If you’re older and worried about negative net worth, it’s time to take more dramatic steps to get out of debt. This includes creating a budget and restricting unnecessary spending. Dedicate larger and more frequent payments toward paying off debts. If you’re considering debt consolidation, realize that this could mean taking on a higher interest payment and could put you in deeper debt for a longer period if you’re not careful.
If you find you have a positive net worth, consider investing if you haven’t already. No matter if you have a positive or negative net worth, it’s important to review your personal financial profile with a qualified professional so your financial goals may be achieved.
Net worth isn’t just useful for personal finance. Some economists look at the net worth of the public to understand the financial health of a nation. The U.S. Federal Reserve studies the average net worth of Americans. When the housing and stock markets suffer, so does the average net worth, as assets that people hold, like homes and stocks, decline in value.
Keep in mind: Since many assets and liabilities have market-driven values – homes, cars, stocks and bonds, etc., it is recommended that you update these figures quarterly to keep the values accurate. Your financial status may be volatile and thereby changeable. Maintaining accurate records will allow you to stay current while getting the most out of your SettleiTsoft experience.