[MUSIC PLAYING] Everyone has a net worth. It's not a term reserved just for millionaires. But what is your net worth and why should you calculate it? Well, the benefit of knowing your net worth is that you learn the balance between what you owe, also known as your liabilities, and what you own, also known as assets. For instance, purchasing a home could improve your net worth. But having a large mortgage would lower it.
If you've ever wondered what your net worth is, there's an easy way to find out. Here's how. First, add up the value of your assets. This includes anything you own that has value. This could be bank accounts, cars, life insurance, retirement savings and even your home, even if you still have a mortgage on it. Your assets can also include any personal items like jewelry, antiques, tools ... anything that has a material value.
Next, add up your liabilities. Again, your liabilities are anything you owe, including the amount you have left to pay on your mortgage, car loan, credit card debt, student loans and home equity loans. OK, so here's the math. Subtract your liabilities from your assets and you've got your net worth.
Did you get your number? Now you're probably wondering what it means. Well, hopefully your number shows a positive balance. This means that you own more than you owe, which is good. If the number you came up with is negative, maybe it's because of the expenses such as medical bills, or unexpected personal loans or you have incurred a lot of credit card debt.
To improve your number, think about what changes you can make to increase your net worth. If you can't increase your income or assets, consider reducing your expenses by limiting your spending. You may need to create a plan of action to get out of debt and improve your financial standing.
Remember, your net worth is specific to your financial goals and your personal situation. Focus on your overall net worth trend improving over time. Lastly, you're not in this alone. LGFCU can help you achieve your goals regardless of where you stand today.
[VOICEOVER] LGFCU is an equal housing opportunity lender and federally insured by NCUA.
The situations described in this video are for informational purposes only and meant to provide examples of the products and services LGFCU offers to its members, which may be subject to approval. Contact a financial advisor or legal or tax professional for additional guidance.
The individuals presented in this video are members and employees of LGFCU and receive no added compensation for their appearance.
LGFCU is an equal housing opportunity lender and federally insured by NCUA.