19 - Beyond Your Bank Balance: How to Calculate Your Net Worth (And Why It Matters)

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Table of Contents

• How to Calculate Your Net Worth
  • Step 1: List Your Assets (What You Own)
  • Step 2: List Your Liabilities (What You Owe)
  • Step 3: Do the Math
• 3 Ways to Grow Your Net Worth
  • 1. Reduce High-Interest Debt
  • 2. Increase Assets Strategically
  • 3. Track & Adjust Regularly
• The Fastest Way to Grow Your Net Worth

Beyond Your Bank Balance: How to Calculate Your Net Worth (And Why It Matters)

Your bank balance only tells part of your financial story. The real measure of your financial health is your net worth—it's everything you own (assets) minus everything you owe (liabilities). The first time I calculated mine, I was horrified to discover it was negative due to student loans. But instead of letting it discourage me, I used it as my ultimate motivator. Seeing that number grow year after year has been more satisfying than any single paycheck and is the best way to track progress toward your financial goals.

How to Calculate Your Net Worth

Step 1: List Your Assets (What You Own)

Add up the value of everything you own with significant value: cash in bank accounts, investments (retirement accounts, stocks), and property (the market value of your home or car).

Step 2: List Your Liabilities (What You Owe)

Include all your debts: student loans, credit card balances, car loans, and your mortgage. A good credit score can help keep these liabilities manageable.

Step 3: Do the Math

The formula is simple: Total Assets – Total Liabilities = Your Net Worth.

3 Ways to Grow Your Net Worth

1. Reduce High-Interest Debt

Pay off credit cards first as their high interest rates drain your net worth the fastest. Look into refinancing other loans for lower rates if possible.

2. Increase Assets Strategically

Automate your contributions to retirement accounts. Consistently invest in low-cost index funds for steady, long-term growth. To further diversify, you can also explore alternative assets like those found in Remote Real Estate Investing programs.

3. Track & Adjust Regularly

Calculate your net worth every 3-6 months to stay on track. Use the trend to adjust your spending and saving habits. Free tools like Empower Personal Dashboard or a simple spreadsheet can automate this process.

The Fastest Way to Grow Your Net Worth

While reducing debt and saving are crucial, the most powerful way to accelerate your net worth is to significantly increase your assets by building new income streams. Instead of just relying on your primary job, you can take control by creating your own digital business. If you're serious about rapidly growing your net worth, a comprehensive program like the Digital Wealth Academy provides a proven roadmap to do just that.