It may sound complicated but the resounding answer my friends is yes! But how will the process begin? Well first let’s look at the detail. Public companies are required to produce reports based on their financial positions.
The fact is, you’ve already heard of this! Income statements, balance sheets, cash flow statements are all in effect the very same thing! They all paint a picture of how a firm is performing financially. Now you may not be a Bill Gates or indeed have a business at all, but the point we are making is, individuals can do exactly the same thing themselves, to outline their position fiscally! It’s called working out your net worth.
Now if you’re not a mathematician or a business expert don’t worry. Once you understand where this formula comes from everything will fall into place!
ADD UP ALL YOUR ASSETS AND THEN SUBTRACT YOUR LIABILITIES – THIS WILL GIVE YOU YOUR NET WORTH!
The natural reaction to all of this is, how can I improve my net worth? In truth it’s not really a complicated process and anyone can do it quite quickly. But in order to simplify this lets tell you about the key words here and what they mean in real terms. Once you have this basic grounding then everything else becomes much easier when dealing with your net worth!
ANY ASSETS YOU HAVE ARE KNOWN AS ‘CASH INFLOWS’ – ANY LIABILITIES YOU HAVE ARE KNOWN AS ‘CASH OUTFLOWS’
So in part two we’ll look at increasing your net worth and what’s involved – we can go into the whole process in slightly more detail. Consolidate your debts. We can then sum everything up for you and give more advice on the topic so you fully understand how things work!
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