Net Worth

Definition:

The amount of equity a company has, which is the difference between its total assets and total liabilities.

Your net worth is just as important as your income. Every nowand then, you should sit down and tally up your personal assets andliabilities, just as you do with your business, to figure out whereyou stand. Enter actual or estimated market values on each line andtotal just as you would a balance sheet.

You can grow your net worth through some combination ofdecreasing liabilities and increasing assets. Why should you careif your net worth grows? One common reason is retirement planning.Simply put, the more assets you have, the more comfortable yourretirement will be. You may also need a high personal net worth tobuy a business, pursue some types of investments, purchase a secondhome, pay for a child’s college education, or for otherpurposes.

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