Why You Should Know Your Net Worth (and Why it's Not Good if You Don't)
I always wonder how many people have a million-dollar net worth and have no idea.
What if, one day, you randomly opened your brokerage account (after taking a hiatus from checking it for 10 years) and realized you had $3 million sitting in your account, in addition to your retirement savings?
Chances are, that doesn't happen very often. But you might have more (or less) than you assume, which is why it's so important to track your net worth.
The Federal Reserve's 2019 Survey of Consumer Finances reported that the average net worth of American families hit $748,800.
How do you stack up?
What is Net Worth?
Put simply, your net worth totals your liabilities subtracted from the value of all of your assets. It's what you own minus your debt.
Your net worth has nothing to do with the amount of money you make in a year or even 10 years. Instead, it gets down to how much you actually hold in your accounts — the money in your checking and savings accounts, stocks and other securities you own, plus the value of your real estate and anything else of value. You subtract credit card balances, student loans and mortgages from that figure.
Let's discuss net worth, what it is and why you should know it. Let's also walk through the steps to calculate it and how to increase it so you hit all your future goals.
Why Should I Know My Net Worth?
It’s important to track your net worth so you know exactly how much money you have and how much you owe. It's possible to have a negative net worth if you have a lot of liabilities, and in that case, it's really important to put together a game plan to take care of it.
It's also important to consider experts' rules of thumb for how much money you should have the following net worth at different ages:
By age 30: Half your salary invested and saved
By age 40: A net worth of two times your annual salary
By age 50: A net worth of four times your annual salary
By age 60: A net worth of six times your annual salary
Read More at https://www.entrepreneur.com/article/382861