How to Calculate Your Net Worth (But This Is More Important)

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How to Calculate Your Net Worth (But This Is More Important)

Net worth is a simple indicator of your financial health. While it doesn’t tell you everything you need to know, keeping tabs on your net worth is helpful for a few reasons. Doing so will show you exactly how much progress you’re making. Building wealth takes a long time. It can sometimes be discouraging if it feels like you’re not making the progress you’d hoped for. From one week to another, it can feel like nothing is improving, especially with variations in the value of your assets. If the stock market does poorly for a few months, this can be disappointing because your net worth might actually be going down. Keeping an eye on the big picture and the changes over a longer period of time is a good idea. When you compare your net worth from one year to another, chances are that you’re going to see progress. This video will outline exactly how to calculate your net worth. After, we’ll discuss the best ways to increase your net worth and finally, what’s even more important than net worth.

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I track every week but just keep an eye on the monthly trend. in 2021 I only had 2 months that had a lower networth than the month before. I average a 2% net worth increase monthly.

TampaRob

Good video but you messed up on the math with Bob he has 42k in assets not 43k.

livingunashamed

I value the things I own at $0. It is way too easy to think your dining room set, for example, is worth a quite a bit because you paid a fair chunk for it. In reality, it is probably worth a small fraction of that. Better to err on the side of caution, imo. This also saves you from doing dumb things to "save money". I knew someone who paid storage costs for a fairly new refrigerator that they wouldn't sell because they couldn't get much for it and were planning to buy place "in a few years" when they could use the refrigerator. I am pretty sure it ended up costing him more to store the thing than it was actually worth.

tomohawk

Hi Chris just wondering about your cartoon or video animation get monetized? Thanks

FunMommy

Great time to check up on your passive income is when you are doing your taxes, so you can compare that at least annually.
So glad to see your channel continuing to grow, Chris!

Squintillions

Love the “Fantasy Lady” (with $1.3M!???)
Hahahaha

tonybranson

Great video, some comments are funny. Really no such thing as a true figure, rather calculated estimates to get a general picture of the plusses and negatives of financial life. Keeping up with net worth is highlighting the good and not good things happening with our stuff. Analyze periodically and make adjustments as needed.

vinsonfamilycollectibles

Money in a 401K has to be discounted by either your current marginal tax rate or your expected retirement tax rate (unless it is in a Roth 401K) as you can't access it without paying taxes. Not doing so will inflate your actual net worth.

DaveCompton

I use Personal Capital for my Net Worth calculation!
I like a Net Worth as it shows a bunch!
The important thing is to eliminate Debt and maximize your Passive Income coming in!
Raise your 401K with every Pay Increase!

duneme

Valuation of cars. Homes etc should be at the fair market value today. Also Classic mistake of considering all assets can be added up simply.
401k is pre-tax and therefore the true asset value of 401k is lower. Hard to tell what the tax rates will be for everyone so most people do the simple addition. A better way would be to reduce the pre-tax assets by a certain percentage.

Ima-hoot

It's all about cash flow baby. What would you rather have - a million-dollar house that impresses all your friends or a million-dollar real estate portfolio that clears 100K a year?
If you are going with the second choice - you are on the way to becoming a Winner

wildtill

A much better way to check your financial situation is to calculate Net Worth Stability:
Net Worth / (Monthly Expences - Monthly Passiv income) = Number of month you can live with no income
Example: 1.000.000 / (3.000 - 1.000) = 500 month = 42 years

klaushougaard

Unless you're done investing, the best thing if you want a high return is a few bad market years letting you buy more and more at a discount. If you're still investing more money the only thing the value increase will do is make you pay a premium for the same asset. Unless you're gonna meme and yolo your money away.

I'm not that rich. I invest in my property and the attached apartment, I keep about a year of living expenses in liquidity at all times and the rest I invest in mostly index funds. At least until a fun property appears close to where I live. A value spike now while I am still feeding my investment in the market will only cost me more money and net me less over time.

BenCarnage

I agree that passive income will be what allows someone to retire, but anyone that has 3 million dollars in assets is in a really good spot and will be able to shift those assets around to their benefit and make some regular income.

adammontoya