Know your net worth—it’s an essential step towards taking control of your finances.
Your net worth is simply your assets (cash, stock, bonds, certificates of deposit, the current value of real estate and vehicles you own) minus your liabilities (mortgages, car loans, student loans, home equity loans, consumer loans and credit card balances).
Do the math, and calculate the figure. Ideally, it should be positive (and the bigger the better!).
Once you know your net worth, keep it in mind as you make financial decisions. Understand that every time you buy something, you’ll have to decrease your assets (by taking money out of savings) or increase your liabilities (by taking on debt) to pay for it.
Ask yourself whether that new handbag or stereo system is really worth sacrificing some of your net worth. Once you think about it, you may decide you’d be happier with a bigger bank account than the item in question!