What is the best way to know or calculate someone’s net worth
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To calculate a person’s net worth, you need to subtract their total liabilities from their total assets. Here’s a step-by-step guide:
List all assets: This includes the market value of real estate, vehicle values, balances in checking and savings accounts, investment accounts, retirement accounts, and any other items of value like jewelry or art.
List all liabilities: This includes mortgages, car loans, credit card debt, student loans, and any other debts.
Calculate net worth: Use the formula:
Net Worth = Total Assets − Total Liabilities = Total Net Worth
For example, if someone has assets worth $300,000 and liabilities of $150,000, their net worth would be:
Net Worth = $300,000 − $150,000 = $150,000
It’s important to note that net worth is a snapshot of financial health at a single point in time and does not reflect income or cash flow.