While budgeting is a real-time tool, it doesn’t tracker long-term progress. If you want to save more and spend less, you must make choices about spending in real-time using a budget. Eating well and exercising is like budgeting because these daily decisions lead to longer-term results. If you want to lose weight, you know you should eat well and exercise. I am going to compare budgeting and tracking net worth to losing weight. Net worth is a measure of financial progress, and it can help you stay motivated, particularly as you think about the long-term. While calculating net worth is pretty easy, you may be wondering, should I track my net worth? The answer is a resounding yes. Liquid net worth is quite similar, except it excludes non-liquid assets like real estate from the calculation. While the above is the definition of total net worth, you may also hear the term liquid net worth. Real Estate (property you own, REITs, etc.)Īdd up all your assets, then subtract all your liabilities to calculate your net worth. ![]()
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