There are many reasons that one may want to find out what their net worth is. Your net worth, for those of you who are just casually browsing and do not know, is the total value of your bank accounts, assets, and properties. Your net worth can, in some circumstances, be a very beneficial thing to know, but usually is just something we Google in-front of celebrity’s names to find out how much they are worth. If you want to find out your total net worth, then look no further than this page. This page will tell you everything that you need to know about finding out your net worth.
It is important that when you are calculating your net worth that you calculate your tangible net worth, a concept that will be explained further in this article. Calculating your intangible net worth and including it with your tangible can be very misleading and provide total sums that are wrong.
Here is how you can find out what your net worth is.
What is Your Tangible Net Worth?
Your tangible net worth is the only way to get an accurate estimate of your actual disposable net worth. Your tangible net worth, similarly to total net worth, totals up all of your assets, liabilities, and money. Tangible net worth, however, subtracts intangible assets, such as patents, copyrights, and other pieces of intellectual property and goodwill.
A business will calculate its tangible net worth to establish its liquidation value if the company were to cease operating or be sold. The tangible net worth is an important figure to those applying for personal or secured loans, and the lender requires a ‘real’ net worth (real being another word for tangible in this circumstance). Knowing your tangible net worth is very important and provides you with an unadulterated and better overview of your finances.
Tangible vs. Intangible
Your intangible net worth must be subtracted from your total net worth so you can get a real depiction of your finances. If you do not do this, you may not qualify for loans, mortgages, or financial aid when it is necessary. Intangible assets are assets that cannot be physically touched, and are, as previously mentioned, entirely intellectual. Your tangible assets are the things that you own that can be, if needs be, touched and converted into money or sold. Assets that are classified as intangible are assets that cannot be touched or seen, even though they may be valuable. Some people may argue that intangible assets should be included in net worth, but banks and loan providers would disagree, and only consider tangible assets as they can be liquidated quicker.
How to Calculate Tangible Net Worth?
Calculating your tangible net worth is not as difficult as you may have thought, and there are many ways that you can do it. Software is a very popular choice but finding a distinction between this software and that software can be laborious and difficult. Still, notwithstanding the disadvantages associated with it, using software is unquestionably the best way to calculate your net worth. The calculation process is a multi-step process. You must first decide whether or not you will be calculating your individual worth, or your partners also. You will need all of your financial statements in a single place – preferably on paper (it’s easier). Don’t expect calculating your net worth to be a quick process, not the first time at least…
Assets and Liabilities
The second stage in the worth calculation process is to calculate your tangible assets. Do yours exceed the average? Let’s find out…
These will include deposit certificates; savings accounts; current accounts; physical money; treasury bills; annuities; life insurance cash value; bonds; pension; retirement plans; stocks; investments; art and collectibles; furniture; technology; jewellery; primary home; rental homes; second homes; vehicles; clothes. Once you have calculated the total sum of all of those, you can move onto your liabilities…
Your liabilities are essentially and debts that you may owe. You can calculate your liabilities by adding up all of the money you owe to debtors for mortgages, finance, and credit card bills, as well as student finance and any other bills. Once you have your liabilities, it’s time to move on…
With all of the previous sums calculated, it is a simple case of inputting them into software and letting the software do the work, or, doing it yourself. If you do it yourself, from the total net worth, you will need to subtract your liabilities and intangible assets. The sum you are left with is your tangible net worth. Good job!
Now, with the help of this page, you understand what net worth is, what tangible net worth is, and what an intangible net worth is. Hopefully, this page will have explained all of it to you and you will now be ready to explain it to somebody else!