“I’m majoring in economics. Actually, I’m majoring in money, anything to do with money. I’ve been attached to money ever since I was a kid. “
~Alex P. Keaton – Family Ties
Alex, fictional as he may be, echoes the sentiments of people around the world; we are attached to money. Let’s face it; money makes the world go round. Having said that, it’s important to remember that money doesn’t have to control us; we can control it. Think of this lesson as a take back the night, only with your finances.
Where do you start?
Assets
| 401 K | $50,000 |
| Money Market Account | $100,000 |
| IRA | $50,000 |
| Total Assets | $200,000 |
Assets include, but are not limited to things like your real estate, 401K, IRA, Money Market and savings accounts, stocks and bonds,and even your car*
Liabilities
| Visa Card | $5,000 |
| Car Loan | $15,000 |
| Home Loan | $100,000 |
| Total Liabilities | $120,000 |
Liabilities are debt; they are the unpaid student loans, credit card balances, loan balances, etc.
Total Net Worth
| Total Assets | $200,000 |
| Total Liabilities | $120,000 |
| Total Net Worth | $80,000 |
Figuring out your net worth is easy, though not always pleasant. When you write everything down, you might find you’re worth more than you thought. Recalculate your net worth statement at least monthly to start. Once you get used to reviewing assets and liabilities, review it quarterly. Do this and you’ll always know where you stand financially.
*Yes, your car is an asset**, although not one that increases in value. In fact, a car’s value typically decreases faster than your loan payments.
**Your car is an asset. The leasing company’s car is not an asset, at least not for you.
