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Net Worth Research Paper

Decent Essays

In personal finance, net worth is the value of all your assets. An asset includes savings, home, and everything that you own and it has value. Moreover, the best way to measure and track the health of your finances is by doing it periodically. According to Siegel & Yatch (2009) your net worth is the difference between your assets minus your liabilities. But, what are your liabilities? Your liabilities are your debts or any financial obligation you have like your mortgage, school loan, and car loans. Hence, in most cases, your net worth will be positive. This means that the value of your asset is greater than the total amount you owe. However, if you owe more than you own, you will have a negative net worth. Meaning that a negative net worth is not bad, it only means that you haven’t earned enough money to overcome the weight of your debts.
b. What is the meaning of the statement that your net worth is the equity you have in your own life? …show more content…

As a consequence, I can live comfortably for the rest of my life. But, how can I increase my equity? You can build up equity by simply paying for things that you owe such as car loan, home mortgage, and household furnishing. Now, how can you calculate your equity? Equity is the difference between your assets and liabilities. Equity is also known as net worth.

In conclusion, calculating my net worth periodically will give me a better idea where I stand financially in life. Hopefully, the results of a personal net worth statement can keep me motivated to increase my equity more

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