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A need-to-know definition the little ones can understand
Your net worth is the sum of all your assets and liabilities. It’s a basic calculation that will help determine your financial worthiness with banks and creditors. If you want to buy a house, rent a car or just get an apartment, it’s an important figure to know.
1. “You save $200 a week, right? That’s an asset. Call it $10,400 annually.”
2. “How much is your bike worth? $1,500?! Okay, also an asset.”
3. “But your student loan is a liability. It’s $5,730 a year.”
4. “So your assets add up to $11,900. But you have a liability of $5,730. Subtract your liabilities from your assets and your net worth is $6,170.”
5. “But you’re priceless to me.”
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