Ignorance is bliss. That’s why some of us choose to not track our financials as well as we should be. The health of our finances ends up being more of a concept and less of a solid figure. With a couple of quick calculations, you can diagnose the health of your finances in no time.
These calculations will benefit you by allowing you to leverage your current finances, or nurture them, accordingly.
Get in touch with your inner accountant by calculating your net worth. You can calculate your net worth by using the following equation:
Assets - Liabilities = Net Worth
Make a list of your assets (things you own that offer a positive value) and make a list of your liabilities (things you owe payments on). Calculate your net worth a few times over each year (or more frequently if you choose to do so) and take note of any changes. What assets are increasing your net worth? How can you capitalize on this success? What liabilities are bringing your net worth down? How can you improve upon your liabilities? Consider these questions and you’ll be well on your way to a healthier financial situation.