![]() Net worth is the difference between your assets (what you own) and your liabilities (what you owe). Liabilities are your debts - what you owe. This means his total net worth (assets minus liabilities) is 1,045,000. The value of Johns assets equals 1.17 million, and his liabilities total 125,000. Your car is a tool that takes you to work, but it’s not a wealth-creating asset. According to the formula for calculating net worthwhat you own minus what you oweJohn Doe is a millionaire. A new car drops in value the second it’s driven off the lot. (Excerpt from The Millionaire Next Door) Multiply your age times your realized pretax annual household income from. ![]() Some possessions (like your car, household furnishings and clothes) are assets, but they aren’t wealth-creating assets because they don’t earn money or rise in value. ASSETS – LIABILITIES = NET WORTHĪ wealth-creating asset is anything an individual or business owns that has commercial or exchange value. Use this formula: assets (what you own) minus liabilities (what you owe) equals net worth (your wealth). The first lesson is to understand the meaning of assets, liabilities and net worth. ![]() To create personal wealth, you must understand the language. ![]()
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