Net Worth - Word of Wednesday

In business, net worth (sometimes called net liabilities) is the total assets minus total outside liabilities of an individual or a company.*

Why do franchises care about net worth?

When you are going to buy a franchise for sale, the franchise company wants to know if you have the net worth available to invest.

How do I figure out my net worth?

It's easy! You can use this net worth calculator or you can do it manually. To calculate it manually you make a list of all your assets. This includes money you have saved in your banking accounts (savings and checking accounts), retirement savings, the value of stocks and or bonds you own, your home, and your automobiles. Including physical assets less valuable than your car counts to but it may be more work than necessary to get a general idea of what your assets are. Now add these numbers up to get the value of your ASSETS.

Next you need to make a list of your debts. This includes the balance of any money you owe. For example credit card balances, student, auto, home or personal loan balances. Now add these numbers up to get the value of your DEBTS.

Now comes the easy part. Subtract your assets from your debts to get your net worth.

TOTAL DEBTS – TOTAL ASSETS = NET WORTH

What if my net worth is negative?

Good question…sometimes this means that you are a younger earner that has not had enough time to make more money than you owe. It could also be because you just made a large purchase that you need time to pay more debt off.  Making your net worth a positive number takes time and commitment. But paying off debts and saving or investing more money, always pays off.

*source  http://en.wikipedia.org/wiki/Net_worth