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Get Caught in This Net

Regarding your financial situation, I’ve said before it’s important to know where you stand. One excellent indicator of where you stand is your net worth. So, let’s define net worth, but let’s make it fun, grammar-school style.

If I have five apples in my basket and I owe three of them to you because you loaned me three apples last week, my net worth is two apples. Pretty simple, right? Basically, your net worth is your assets minus your liabilities–what you have minus what you owe.

Well, that makes sense. But why bother to track it? 

Because one’s net worth is a good picture of one’s overall financial health. Did you know that if you ignore your financial health, it will go away? Take care of it and it will take care of you. It’s kind of like your teeth. If you want them to stick around, brush twice daily, floss regularly, and see the dentist every six months.

If you track your net worth over time, you will be able to make sure your wealth is moving in the right direction and make adjustments as necessary to keep it that way.

So, how do you track your net worth? It’s as simple as listing those apples (with a value attached) that I mentioned earlier. I found a free, simple tracking form that I liked at formslaw.com. Feel free to check it out.

Even though you might not want to discuss it, there is one more reason to track your net worth. Keeping records like yearly net worth statements (as well as other pertinent information) will make it easier on your next-of-kin if something were to happen to you and you departed this life earlier than expected (told you that you didn’t want to discuss it). Doing this for your family is a huge act of love.  

So, show a little of that financial affection to yourself and your loved-ones and start tracking your net worth on a yearly basis at the very least. This kind of self-respect might be kind of weird, I know, but you’ll get used to it.

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