know your worth.
Hello peeps!
Good Monday!
I know is a bit sad these couple of days due to lockdown. But, do not let negative energy affects your mood to be happy and energetic at the start of the week.
I have met so many prospects and clients for the past months and so. As I shared with you, from these people I’ve met, most of them doesn’t have income protection (insurance/takaful). The second financial element that most of us don’t know is our own worth.
“When you understand that your self-worth is not determined by your net-worth, then you’ll have financial freedom.”
- Suze Orman
So much yes to this!
I love this quote because it serves as a wonderful, much-needed reminder that there’s more to life than money. You know this, of course, but that said, money still provides the means necessary to afford the life you’re hoping to live. So while Suze Orman is 100% right that your self-worth should NOT be determined based on how wealthy, popular, or successful you are, your net worth (on the other hand) is a worthwhile statistic you can and should improve.
Let’s start with the basics.
What is your net worth? How is it calculated?
Simply put, your net worth provides a picture of your financial health. It is your total financial value after assessing the value of everything you OWN: your assets (i.e. investments, residence, real estate, etc.), subtracted by everything you OWE: your liabilities (i.e. consumer debt, outstanding mortgage, student loans, etc.). Every financial decision should be made with the end goal of increasing your net worth.
Here I provide a link to calculate your own net worth.
Still a little puzzled about this concept of net-worth? You’re not alone! Here are some FAQs:
What if I calculate my net worth and its negative?
If you find yourself with a negative net-worth, don’t panic! This doesn’t necessarily mean that your financial health is in a terrible spot, but it does indicate that your liabilities outweigh your assets. If you still have student loans and other large amounts of consumer debt, this makes sense. You likely haven’t been able to afford to accumulate enough assets or eliminate enough debt to erase those financial liabilities from your personal balance sheet yet. So…you might then be wondering…
How can I improve my net worth?
Building your net-worth is the name of the game. Every decision you make should aim to reduce your liabilities, responsibly accumulate assets, and ultimately increase your net worth. The healthiest way to improve your net worth is to eliminate unnecessary expenses and aim to reduce your debt.
For most people, credit card debt is one of the larger liabilities they must deal with. By making a conscious effort to control your spending and set up a strategic savings plan, you may find you’re able to make significant progress in eliminating those stressful liabilities.
Conversely, you can also increase your net worth by purchasing worthwhile assets or responsibly investing in your future. While you may expend resources (namely cash) to purchase that first house or make contributions towards your retirement plans, your net worth will increase if those assets appreciate.
Ultimately, improving your net worth is a balancing act of responsibly investing and aggressively eliminating unnecessary liabilities.
Hope you guys now know how to calculate your own worth and realize the importance of knowing this value so that you can plan towards your own financial freedom.
Best of luck,
EMIR xx
