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What Are You Worth?

Bench Racing

by Ryan King

No, I'm not asking you to prove your worth as a person based on some OTHER person's value system.

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What I mean is, what's your net worth?

Do you know?

You should and this is why:

Your net worth lets you know how healthy your life is financially and you need to know that in order to be able to reliably support your hobby.

How do you figure out your net worth?

That's more complicated, but to summarize for this post, you do it with a net worth statement.

A net worth statement does three simple things:

  1. Tallies the value of your assets
  2. Tallies the value of your liabilities
  3. Subtracts the value of your liabilities from your assets to arrive at a final number: your net worth

What that means is that your net worth can be positive or negative and if you itemize correctly – that is, create tallies of groups of assets – you can see the areas of your greatest personal investment, as well as how much you owe and with what types of debt.

Like any other measurement tool, it's a tool and what it allows you to do is monitor your financial situation and even helps in providing information for leveraging your money for better results.

It's expensive to be an automotive enthusiast and that means that your limited funds need to be utilized intelligently, not just spent until there's a zero on your bank account or the credit card is maxed out. The net worth statement is one of the most important keys to making the best use of your income.

For more on practical ways to manage your income, check out the Budget Kit by Judy Lawrence. It has great advice and methods for watching your finances, using your money more effectively, and building for a better tomorrow.

Ryan

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