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Curious about what it means when you hear “What is your net worth?” Let me break it down for you!
Money, money, money… well, not just money… assets and liabilities. Your net worth is the total value of all your assets minus the total value of your liabilities. It’s what you own minus what you owe.
Assets are resources that are regarded as having value. The things you own like your car, home, investments, cash — and stuff like shoes, purses, jewelry — all have a value to them.
*This is why I say everyone needs an estate plan — everyone has stuff.*
Liabilities are things you owe, as in debt, like mortgage, consumer debt, student loans, etc. For example, if you own $100,000 in assets and have $10,000 worth of liabilities, your net worth equals $90,000. Understanding your net worth can help you identify the areas where you spend too much money, or reveal the reasons you’ve accumulated certain debts.
Like I always say, it’s not how much you earn, but how much you keep. Your net worth should increase on an annual basis. Your net worth can motivate you to spend your money wisely, invest, save more, and encourage you to be more aggressive in your approach!
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Rianka R. Dorsainvil, CFP®️ is the Co-Founder and Co-CEO of 2050 Wealth Partners a virtual, fee-only comprehensive financial planning firm dedicated to serving first-generation wealth-builders, entrepreneurs, and thriving professionals. Rianka also hosts 2050 TrailBlazers, a podcast aimed to address the lack of diversity in the financial planning profession by engaging industry experts and leaders in conversation.
As an award winning successful, millennial Certified Financial Planner professional, Rianka offers a unique perspective not only on the current state of the financial service industry, but on how to stay relevant in an ever-changing world.
Rianka serves as a member of CNBC’s Digital Financial Advisor Council and CFP Board’s Diversity Advisory Group, is a Forbes Personal Finance Contributor, and has been recognized for her accomplishments and leadership within the industry by leading publications and organizations such as Investment News’ inaugural 2017 Women to Watch Rising Star and Wealth Management’s Ten to Watch in 2018. She has been published in PBS NewsHour, Forbes, USA Today, Black Enterprise, CNBC, Women’s Health, and more.