Constantly reviewing to measure your net worth

It is important that you measure your financial assets, even your liabilities in the face of your future plan and current spending.

 If you have future plans such as sending your wards to school, building a house, setting up a business, buying a car, among others, then it is important you know your current financial status say experts.

 Although, it may be hard to price yourself, but as the saying goes, you never know how to get somewhere unless you know where you are right now. It is advisable you quantify your financial assets and liabilities.

 Doing this experts say will enable you create a comprehensive financial plan as well as provide a measure to ascertain the level of progress.

 Pricing yourself helps you to know your net worth, prioritize your investment portfolio, improve investment and savings habit and control our spending habit.

 For instance, you may be thinking that you are doing well in one aspect of your assets and not knowing that you are declining in the other.

 Without overemphasizing the benefit of quantifying your assets, Adewale Adeleke, managing partner, WA Professionals, Lagos said for more accurate assessment of individuals and family financial status it is recommended the assets and liabilities are not only quantified but also documented.

 This, he said could be done in tabular form by listing all assets in quantities, unit value and total value in a manner that total values of assets are determined. The same things should be done to all liabilities – being what individual or family owes others.

 It is however important to understand these financial assets and liabilities. Differentiating between these two concepts, Adeleke explained that financial assets are both fixed assets and liquid assets. The assets that can not be easily converted to cash such as, building, land, company, stocks, Motors Vehicles, Jewelries, cloths among others. And the assets that are cash or can easily be convertible to cash like, Cash on hand and in bank, fixed deposits, Stocks and so on. While liabilities are what individuals or family owe banks, friends, credit purchases, insurance premium that has fallen due, rent that has fallen due, salary owed domestic staff and others.

 On the other hand experts see Net worth is largely about balancing your assets with your debt to see which way and how far you lean. Net worth is the amount of money representing how much you would have if you were to sell all your assets and pay off your debts.

 To determine your net worth involves taking a good hard look at all aspects of your finances which include the good, the bad and the ugly.

 To calculate your net worth, experts say after gathering all the information about your own assets and liabilities, you simply need to add up all of the amounts listed under assets, and separately, add up all of the amounts listed under liabilities. You should end up with two numbers: a grand total of assets and a grand total of liabilities. Finally, subtract the total liabilities from the total assets; you then have your net worth.

 However, it is wise to approach financial experts who will employ their expertise to help you to improve your financial defects such as short cash supply, irrational assets structure, insufficient preparation for possible risks, and ensure your financial security and that of your family.

They can based on overall examination of your consumption and liabilities, suggest an assets portfolio addressing your particular problems so that you will be able to maintain proper liquidity of your assets.

Also while developing financial management plan, experts will carefully consider all aspects of your financial status, which include your family situation, household assets, cash and financial assets, real assets and investment, as well as your liability, income, expenditure and will to take risk.

Hope Moses-Ashike