After reading the book Rich Dad Prophecy by Robert Kiyosaki, I've decided to post changes to my net worth each month in addition to the BHAG updates. He makes a great point in the book that you can't effectively change your financial situation if you're not seeing the problems arise on a monthly basis. This initial post will show you how to set up your own...
A person's net worth is calculated the same way that a business's balance sheet is calculated. A - L = OE or simply ALOE.
A = Assets
L = Liabilities
OE = Owner's Equity
The individual looks different, but is very similar. A - L = NW
A = Assets (not including house)
L = Liabilities
NW = Net Worth
Assets not including your home is a big point of contention with people. I completely disagreed with Robert on this, but now I agree with him to a certain extent. Your home should not be counted as an asset unless it generates cash flow for you. Which means that you're running a business out it, you receive rent, brewing meth in the basement, or maybe you're able to grow crops on the land. Doesn't matter as long as it's generating cash!
So once you take all of your assets (retirement plans, businesses, bank accounts, etc.), you then must take away any sort of liabilties that you have (mortgages, personal loans, student loans, auto loans, etc.), and the resulting number is your net worth. However that final number changes each month is going to be my change in net worth.
For a glimpse at somebody who already does this and actually bares his numerical soul, check out this website http://www.milliondollarjourney.com/category/net-worth-updates
-CC
A person's net worth is calculated the same way that a business's balance sheet is calculated. A - L = OE or simply ALOE.
A = Assets
L = Liabilities
OE = Owner's Equity
The individual looks different, but is very similar. A - L = NW
A = Assets (not including house)
L = Liabilities
NW = Net Worth
Assets not including your home is a big point of contention with people. I completely disagreed with Robert on this, but now I agree with him to a certain extent. Your home should not be counted as an asset unless it generates cash flow for you. Which means that you're running a business out it, you receive rent, brewing meth in the basement, or maybe you're able to grow crops on the land. Doesn't matter as long as it's generating cash!
So once you take all of your assets (retirement plans, businesses, bank accounts, etc.), you then must take away any sort of liabilties that you have (mortgages, personal loans, student loans, auto loans, etc.), and the resulting number is your net worth. However that final number changes each month is going to be my change in net worth.
For a glimpse at somebody who already does this and actually bares his numerical soul, check out this website http://www.milliondollarjourney.com/category/net-worth-updates
-CC
RSS Feed