Today I finally did it. I analyzed my financial situation and estimated my net worth. This is a task that I have been wanting to do for quite a while. I wanted to get an overview; to know what I have. And you know what? My net worth is three times higher than my bank account is making me believe.
How did I calculate it?
First, I created two categories: liquid capital and non-liquid capital. Then I jotted down all the positions that were of financial value and filed them under the respective category.
The first category, liquid capital, is comprised of financial assets that you can easily use to for example buy groceries in a supermarket. For me, that is the cash I carry around in my wallet and the money I have on my bank account.
The second category, non-liquid capital, are the things that are of value that I cannot use to make my daily purchases. For example, I cannot take my bed to the supermarket and buy 1.100 apples with it. It takes time to turn them into a currency that becomes trade able. I included the following: security deposit, steemit account, furniture (new price minus 50 %), video game collection (average value of what people are selling on eBay) and gift vouchers. For now, I have also put the little amount of cryptocurrencies that I own into this category. Further additions could include your car, your house or a savings account that isn't as easily accessible.
After listing all the positions and their calculated value, I summed up each category. This gives me a nice overview of both. How much capital do I have to buy the things that I need every week? How much non-liquid capital is available, if I would want to make a large investment or ran the risk of my liquid capital drying up?
For my last step I added both the sum of liquid capital and non-liquid capital together. This equals my net worth. And if I were just looking at my bank account and my (physical) wallet I would just see a third of it.
The advantages of keeping track of your net worth!
As I mentioned before, having an overview is great. It will give you a good feeling of control. Of course, my approach to it is pretty simple and bare-bones. You can go far more in depth and you probably have a lot of assets that I don´t have or didn't think about. Would be great if you could let us know in the comments below, what assets you have or came up with.
Since I plan to gauge my net worth on a monthly basis, I have a great comparison tool. I can see which positions gained in value and which ones have dropped. If you also plan to compare it on a monthly basis, I recommend always doing it on the same day of the month. For example, I chose the 15th. Why? My salary arrives at the end of the month and I pay all of my fixed costs (eg. rent, power, ...) during the first 10 days of the following month. If I would calculate my net worth on the 1st of every month it would distort my calculations. It would seem like I possess more than I actually have.
The last point I want to make is that calculating your net worth gives you confidence. You are (financially) worth more than you think. Now I am the last person to say that the amount of money equals self-worth, but it just gives you a nice little boost that is comforting. And I also believe that this in turn will lead to attracting more wealth in the future.
I hope this post was able to inspire you to think about your own net worth!
If you have been doing this yourself for quite a while, it would be great if you could share your experiences. Either in the comments below or by publishing your own post.
Have a great day!
Yours
I Am K