Did you know?
It’s not what you currently own that determines Net Worth Uptodate whether you’re rich or poor. Just because both my wife and I could be living in a big house in an upmarket suburb, drive two Mercedes Benz, and take our youngsters to an expensive school, does not automatically mean we’re rolling in fabulous wealth like Ali Baba of the Arabian Nights story.
Actually, there’s something else, and bank managers and other lending institutions love it.
Do you know what that thing is? I’ll tell you in a moment.
Be prepared for a shock to your system!
Well, the thing that most bank managers and lending institution love to see on their desk before they can even think of doing business with you is a financial document… actually, a financial statement, as most people like to call it.
And the name of the financial statement is…
Net Worth Statement!
What is a Net Worth Statement?
Simply put, a net worth statement is a financial document that shows your personal Net Worth (or true worth – what you’re really worth in financial terms. It is the overall balance remaining after deducting your total calculated liabilities from your total calculated assets.
The balance that remains after doing this simple math calculation is your Net Worth, or your ‘true worth!’
Hence, Balance Sheet.
Your Net Worth statement is a document which tells other people or anyone who’s interested, such as a bank manager, a lending institution, etc. whether you’re rich or poor. In other words, do you possess sufficient assets to cover your debts should you be required to pay back a loan, for example, at short notice?