{"id":12542,"date":"2014-11-24T17:59:00","date_gmt":"2014-11-24T09:59:00","guid":{"rendered":"https:\/\/www.imoney.my\/articles\/?p=12542"},"modified":"2024-04-19T14:36:43","modified_gmt":"2024-04-19T06:36:43","slug":"how-much-is-your-net-worth","status":"publish","type":"post","link":"https:\/\/www.imoney.my\/articles\/how-much-is-your-net-worth","title":{"rendered":"How Much Is Your Net Worth?"},"content":{"rendered":"

Ever wondered how much you are worth? While it may be hard to quantify your true worth (we\u2019ll leave that to the existentialists), you can quantify your net worth or the true state of your finances with a tried-and-tested formula.<\/p>\n

What is net worth? In simple terms, it is the value of everything you own, minus all your debts.<\/p>\n

Knowing your net worth will give you an accurate picture of where you stand financially, allowing you to assess your financial progress (or transgressions) from year-to-year. Knowing your net worth can also serve as an incentive to clear off your debts and save for retirement, among other financial goals.<\/p>\n

<\/span>How to calculate my net worth?<\/b><\/span><\/h2>\n

The actual calculation of your net worth is pretty straightforward. You add up the value of everything you own (your assets) and minus from that amount the sum of all your debts (your liabilities). The resulting number is your net worth.<\/p>\n

Assets include cash and investments, unit trusts<\/a>, retirement funds<\/a>, bonds, property, cars or anything of monetary value.<\/p>\n

Liabilities are what you owe including mortgage<\/a>, car loan<\/a>, personal loan<\/a>, PTPTN<\/a> and credit card debt.<\/p>\n

In theory, your net worth is what you will have in cash if you sold every significant asset you own and paid off all your debts.<\/p>\n

If you have more liabilities than assets, you will have a negative net worth.<\/p>\n

One might end up with a negative net worth as a result of taking out a substantial loan or a number of loans. For instance, one might have used a student loan to pursue higher education. Although education increases the likelihood of higher future earnings, that potential is not a tangible financial asset.<\/p>\n

Over-borrowing or poor financial management, such as racking up huge credit card bills and not paying them off in time could also accumulate to a large amount in your liabilities column.<\/p>\n

However, having negative net worth does not necessarily mean you have to declare bankruptcy as long as you can service your debt in instalments.<\/p>\n

\"networthinfographic\"<\/a><\/p>\n