When it comes to financial literacy and thinking Wealth Creation you can not help but think Net worth. As Net worth is your best indicator of how well you are doing with wealth creation.Simone Biles Net Worth And by focusing on your Net worth you will ensure that you maintain the appropriate ratios between your debt and assets.
I am sure you may have heard this financial expression before but may not really understand what it is. Your Net worth is simply your total assets minus your total liabilities – what you own minus what you owe. And is reflective of your wealth at any given time.
So the real question is will you use your earning to create wealth or simple give it away?
Will you chose debt or wealth?
As you cannot consume your money and create wealth at the same time. Nor can you service debt and build wealth at the same time. By simply financing your current lifestyle with debt you are giving up the opportunity for a secure financial future.
Here is a simple test to see how well you are doing with your building wealth.
Multiply your age by your current income and then divide by 10.
Your result is the estimated Net worth you should have for your age and current annual income.
If you are age 35 with an annual income of $40,000 then your Net worth would be 35 x $40,000.00 = $1,400,000.00 /10 = $140,000.00.
And you should be growing your net worth by at least 10 percent each year.
Unfortunately, for most persons this is usually a negative number – meaning that you owe more than you own. If this is your case do not lose heart just commit to changing this number into a positive one as soon as possible. And the only way that can happen is if you begin to curtail for spending and access to credit.
It may also surprise you to hear that becoming wealthy is not about investing a lot of money, it is really about investing regularly for a long period of time. As wealth takes time and the length of time is more important than the amount of money.
And most financially independent persons have been investing for 30 years and benefiting from their most important asset “Time” which allows you to take advantage of one of the most powerful financial force – compound interest!
Unfortunately, the reason you may not be building wealth is NOT because you do not know about wealth-building technique. It is really because you do not have any money left to invest each month!
Which is why it is important for you to develop a plan that allows you to take control of your money and each and every pay. You need to begin now to revaluate how you are spending your money and understanding and eliminating all debt so that you can begin focusing your money on creating wealth instead. Taking Control of Your Money Workbook is a useful resource for getting started.