Net Worth

There is a new kind of fixation on social media in recent years to compare and list individuals with very high net worths. Popular tech CEOs (Bill Gates, Jeff Bezos, Elon Musk), the Oracle of Omaha (Warren Buffet) and the king of luxury brands (Bernard Arnault) have been '“fighting” for the top spot for the better part of the last 20 years. Forbes even takes out lists each year for different categories. Like this.

So how is net worth calculated? For billionaires who would not want to disclose all of their assets to everyone, the process would be quite complicated, something only companies like Forbes, with ample resources, would try to do. But for regular people, we can calculate our net worth simply by subtracting our liabilities from our assets.

You would have a positive net worth if your assets are more than your debts and a negative net worth if the situation was the opposite. Now you obviously understand that your net worth should be as high as possible (with a + as prefix). So I’ll give you a simple Google Sheet to calculate and keep track of your own net worth. Here. This was developed by Noah Kagan (check out his YouTube channel, he shares very interesting content). You will have to change some rows possibly as per the country you live in.

You might ask why measuring your net worth is important. Well, two reasons.

First, your net worth is a direct indicator of your financial well-being. So if you know how it is, you can work on improving it.

Second, Your income is only half of the equation, it doesn’t guarantee wealth. You can have a high income and be laden with debt due to your lifestyle and someone with a lower income could have a healthy excess of assets over liabilities. So tracking your net worth will make you understand if you need to cut down on lavish expenses so that you’re not paying off liabilities till the later parts of your life.

If you hadn’t thought of this till now, no problem. The sooner you start the better. If you’re interested in more personal finance stuff, I’ll write more articles on the topic. Meanwhile, you can start by reading “Rich Dad Poor Dad”, here are my notes on the book.

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