The net worth of celebrities and politicians gets a lot of attention, but did you know that you have a net worth too? Net worth is just the difference between the value of all the assets you hold and the value of all the liabilities (debts) you have to pay.
Now, while the concept of net worth is easy enough to understand, the actual process of determining net worth is much more complicated. This is because net worth is not just about the money you have — it’s about all of your assets. And when you’re considering certain assets, it can sometimes be hard to estimate exactly how much they are worth. This is the reason why the net worth of a celebrity can often be misleading.
Fortunately, calculating the average person’s net worth is a lot easier than doing so for a celebrity.
If you have a high and positive net worth, then you can consider yourself financially stable. On the other hand, a negative net worth means you owe more money than you receive, and thus, you should consider trying to manage your finances better.
Net worth does not only apply to people. You can also calculate the net worth of an entity like a business or company.
When it comes to business, creditors will look at a company’s net worth to determine whether a loan is safe or risky. Creditors want to be sure the company can pay back the loan.
Continue to the next slide to learn how to calculate your net worth.