SkateboardLawyer posted an update 7 months, 1 week ago
Understanding Your Net Worth Statement – For Richer Or Poorer?
Did you understand?
It’s not that which you currently own that determines whether you’re rich or poor. Simply because both my wife and I possibly could be living in a huge house in an upmarket suburb, drive two Mercedes Benz, and take our youngsters to a pricey school, does not automatically mean we’re rolling in fabulous wealth like Ali Baba of the Arabian Nights story. net worth
Actually, there’s something different, and bank managers and other lending institutions love it.
Do guess what happens that thing is? I’ll let you know in a moment.
Be equipped for a shock to one’s body!
Well, the thing that a lot of bank managers and lending institution love to see on the desk before they can even consider doing business with you is an economic document… actually, a financial statement, because so many people want to call it.
And the name of the financial statement is…
Net Worth Statement!
What’s a Net Worth Statement?
To put it simply, a net worth statement is a financial document that shows your individual Net Worth (or true worth – what you’re worthy of in financial terms. It is the overall balance remaining after deducting your total calculated liabilities from your own total calculated assets.
The total amount that remains after doing this simple math calculation can be your Net Worth, or your ‘true worth!’
Hence, Balance Sheet.
Your Net Worth statement is a document which tells other people or anyone who’s interested, like a bank manager, a lending institution, etc. whether you’re rich or poor. In other words, do you possess sufficient assets to cover your debts in case you be required to pay back a loan, as an example, at short notice?
Your Net Worth may also tell others if you’re moving forward, going backward, or perhaps standing in the center of the street of one’s financial life.
Like, an advantage (+) amount alongside your the amount (+$350 678.00) means you own significantly more than you borrowed from others.
Problem is IF your Net Worth shows a minus (-) amount (-$350 678.00), it simply means bad news for you. Or this means that your total liabilities exceed your total assets, and you borrowed from others a lot more than you currently own. And your rivals view this as another way to express your fortune is all gone… finished… kaput.
Or “He’s dead broke!”
Why did I say that?
That’s because after your creditors have sold all that you own to cover your debts, you will see forget about money left to your name. And the worst part is that you it’s still required to pay for more of one other creditors whose outstanding accounts remain unsatisfied.
But the fact that you’ve a minus (-) net worth does not necessarily means all is lost. You see, most people understand that life is just like a roller-coaster. Sometimes, and through no fault of yours, things can go topsy-turvy on you. For richer or poorer.
And for those who are fortunate enough to learn this, a minus (-) net worth is the catalyst that they might require to propel them to newer heights of financial freedom.
That’s because as soon as they are confronted with a challenge like this, they do everything in their power to bring in additional money and assets within their coffers to stabilize the minuses in their net worth statement.
Still wondering why it’s called a Balance Sheet?
And so the question is…
Perhaps you have investigated your Net Worth, or put aside some of one’s precious time for you to balance your assets and liabilities lately? If not, today is the best time for you to make sure that your financial statements are a true reflection of your true wealth.
Besides, in the event that you don’t, how are you going to know whether you’re moving forward, going backward, or just standing in the middle of the road of one’s financial life?