Understanding Net Worth: Key to Financial Success

Net worth statements empower individuals to understand their financial position and make informed decisions.

### Understanding Your Net Worth: The Key to Financial Independence
* 💰  Net worth is calculated by **subtracting your liabilities from your assets**, providing a **snapshot of your financial health**.
* 📊  Similar to a business balance sheet, a personal net worth statement helps track **progress towards financial goals**.
* 🎯 " How on Earth can you know if your destination is where you're going... if you don't know **where you are today**?
* 📈  Tracking **net worth** can highlight achievements and areas for improvement, serving as a **financial dashboard**.
* 💡  Regularly updating your net worth statement can lead to **better financial habits and decision-making**.
* 👫  It is a valuable communication tool for **couples, families, and individuals** planning their financial future.
* 💑 " I don't mind, Sharon. This is going to seem like a nerdy exercise at the beginning if you're using this with your significant other, but I tell you, you do this long enough, it will become **romantic in the fact that you're now planning**.
* 🎉  Celebrating milestones like reaching **zero net worth**, **$100,000**, or **$1 million** can be motivating and rewarding.

[Music] The fourth number that we think that you ought to know that is super important and can have a huge impact on understanding and commanding your financial life is your net worth. This is a big one. This is one that is exciting to us because your net worth is simply all the things that you own minus all the things that you owe. And it's a big one. Well, I mean, if you were a business, you're going to have what's called a balance sheet, where you're going to look at the things you own versus the things you owe, and then the difference is your equity or what you have. Well, it's the exact same thing for you personally. Just like a business has that balance sheet, you're going to have a net worth statement. You're going to take what you own minus what you owe, and what the difference between that, that's actually your net worth, what you have working for you, your army of dollar bills. We need to focus on this. So few people are actually putting in any

effort of knowing what do they have working for what do they owe people what do they own. You got to put some time into this, and the reason this is a significant number, something that you should know, is how on Earth can you know if your destination is where you're going. If you want to get to financial independence, if you have goals, if you want to retire, if you want to fill in the blank, how on Earth can you know where you are in your journey if you don't know where you are today, if you don't understand where your starting point is. Well, that's exactly what a net worth statement does. Well, a lot of people ask us, Guys, I don't know where to start. I've never done this. What do I do? We actually have a great tool available for you. You can go to learn.money.guu.vn, set portfolio growing, or of I only growing my wealth because the value of my home is going up. Your net worth statement will give you insights into all of these different areas, but you

won't actually know that unless you start tracking it. Well, I don't like to leave any dollar behind. I want every dollar to feel purposeful, and if you're not doing a net worth statement, you can't really have command of what every dollar is doing for you. So, it really, this is why this matter is. You got to know where you're at financially. You got to know where you're at, and it can also serve as a dashboard for achievements and do-betters. Oh man, it's so great. I finally crossed, you know, a lot of people, they celebrate getting to zero net worth. That's a big deal in the world in which we live today. And then, oh, I crossed a $100,000 net worth. I crossed a million-dollar net worth. Oh, I noticed that my debt went up a lot from last year to this year. What? Oh, I bought that car. Was that a good decision? It will highlight those areas, those decisions that you're making to help you understand, Are the decisions I'm making actually good?

for me or they moving me in an opposite direction they actually want to be going. I also tell you this is why it matters is that we talk about so much of personal finances that 80% that's the behavior and the consistent good habits that you're doing. If you actually will get in the habit of doing a net worth statement, I'm telling you this will have an influence on you that you can't even see. I think about it when I like when I'm exercising I start eating better. Yeah because I feel like when you start going to the gym and you start exercising, you're like well I don't want to just go squander all that hard work so I eat a little better just because I'm naturally those things are connected to each other. It's the same way if you'll start doing the net worth statement. I think you'll be surprised that you'll think about your spending a little bit different. You'll think about how much you have going to your Investments. It will make you a better

version of yourself just by waking up and making sure that the behavioral side is not working against you. It's actually building assets and armies, the dollar bills for your future. It's also an amazing communication tool, whether you're talking about you and your spouse trying to figure out how do we get on the same page, how do we prioritize things, how do we know that the decisions we're making are moving us towards the things that we actually care about. A network statement is a great way to do that. Or maybe you are an aging parent and you now have adult children, and you're trying to figure out, okay, what does the transition of our estate, the transition of our assets look like. Doing a net worth statement will show you all the things and all the areas you need to address, and it could be a great means of communication for you to speak to the Next Generation, to show them what your wishes are. So, you can actually use this not just to encourage and influence your behavior, but to also bring up a

conversation. It's kind of a difficult conversation to have otherwise. Look, I don't mind, Sharon. This is going to seem like a nerdy exercise at the beginning if you're using this with your significant other, but I tell you, you do this long enough, it will become romantic in the fact that you're now planning. You can make this an annual tradition. Go on date nights, plan what you're going to be using these resources for. It can be a great communication and effective tool for knowing, making sure you're both on the same page. Anybody who goes into any type of counseling or anything, they're going to tell you, you got to have good communication. Use this effective tool to help you.

Why Your Net Worth Is Crucial to Your Financial Journey

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Your net worth is the difference between what you own and what you owe, similar to a business's balance sheet.

It's a crucial number for assessing your financial situation and determining your progress towards financial goals.

Knowing your net worth is essential for understanding your starting point on the journey to financial independence.

Tracking net worth is crucial for understanding one's financial situation and making purposeful decisions with money.

It serves as a dashboard for celebrating achievements and identifying areas for improvement.

Developing the habit of doing a net worth statement can positively influence spending and investment decisions, leading to better financial habits overall.

A net worth statement helps build assets for the future and serves as a communication tool for couples and families.

It can aid in prioritizing decisions and addressing the transition of assets for aging parents with adult children.

Using a net worth statement can also facilitate communication of wishes to the next generation.

The Importance of Planning and Communication in Relationships

Planning together can initially feel awkward, but it can become a romantic tradition over time.

Going on date nights and discussing resource allocation can improve communication and ensure both partners are on the same page.

This approach is an effective tool for fostering good communication, which is essential in any relationship.