Because You're Worth It

Image source www.jokeroo.com

I am thankful that the process of marriage doesn't require an assessment of my net worth. What a horrifying experience that would make for me to be dissected financially. Especially since I was pretty much worthless and my then-future-wife-to-be was a doctor, I can safely say that I made a pretty good deal (ha!). Cutting through the chase, net worth is assets minus liabilities.

The current median (the middle value, not average) net worth is $57,000 (2010 dollars) according to a research by NYU professor Edward N. Wolff or $66,740 according to the Census Bureau in 2012. What we can assume from the number is many households in the USA are able to accumulate wealth, $66,740 to be exact. In order to accumulate wealth, our assets need to be greater than our liability.

Besides net worth, we are talking about the balance sheet. The personal balance sheet is a snapshot of your financial position at a certain point in time that consists of assets, liabilities, and net worth. Assets are what you own, liabilities are debts you owe, and net worth is how much is left if all assets are sold and debts repaid. If you are facing bankruptcy and all your assets are liquidated to repay debts, it is a rough estimate of how much you can get for all assets (though in liquidation, sometimes that number is further below).

In step 4, we have established that the Chief Financial Officer (CFO) of our finances should be ourselves. A captain of the ship must know where the ship is currently positioned, before sailing the ship toward the final destination. Step 8 is to identify our starting point, knowing our net worth. First we need to gather all information regarding assets and liabilities. Second, the job of a CFO is to increase net worth.The only way we can increase our net worth is by increasing our assets and decreasing our liabilities. You can visit FinancialLiteracyMonth.com for a quick calculation of your net worth. You can also download a file I downloaded from Microsoft templates and plan to continually expand on, here for Libre, or Excel. You can download and install Libre for free if you don't have Excel.

Remember to spend on yourself first by increasing your assets so that you increase your net worth. Why? Because you're worth it.

So fear Allah as much as you are able and listen and obey and spend; it is better for your selves. And whoever is protected from the stinginess of his soul - it is those who will be the successful.

64. Surat At-Taghābun (The Mutual Disillusion;16)