Awhile ago we talk about assets. Assets are those items or things that has value. Examples of assets are lot property, stock shares, business capital, business equipment and supplies. A car or any other type of automobile are also an asset.
You can get a lot of benefits when you track your net worth. Tracking your net worth is very simple and easy to do. All you need to do is to have a copy of a SALN form. SALN simply means statement of assets, liabilities and net worth.
- If you will track your net worth, it will surely increase. According to T. Harv Eker in his book Secrets of the Millionaire Mind, “what you track increases”.
- If you are tracking your net worth every year, you will find out if you have a lot of liabilities than your assets. That being said, you will avoid buying the things that are not helping you increase your net worth.
Keep On Acquiring Assets
There are many ways to increase your assets. Just keep on buying and buying things that appreciates value and avoid buying things that depreciates value.
- Stock shares
- Mutual fund shares
- Lot properties
Lessen Your Liabilities
If you are buying assets and at the same time you are buying things that depreciates value, your net worth will also increase but slowly. You should avoid liabilities. But mind you guys, liabilities are somehow the best way to increase your net worth. Hmm, sound’s strange? Here’s how liabilities can help you become rich.
- If you borrow money from the bank or to other financial institutions and you invest the borrowed money, that would be fine. Actually, that’s great because you are making use of the power of leveraging.
- Imagine if you borrow money and you’ll invest it that earns more interest.
Net Worth is the Basis of How Wealthy You Are
If you have a brand new car and you just buy it in an installment basis or worst using your credit card, that car is not an asset and at the same time it is also a liability. What I mean when I say “your net worth is the basis of how wealthy you are”.
Think about this. If you have a car and you feel like rich. But when you calculate your net worth (assets minus liabilities), you get negative value. Are you rich? It’s you who can answer that question. So, you must increase your net worth by buying more assets and avoid buying things that considered as liabilities.
Believe me if your assets are increasing and your liabilities are decreasing, you will feel good about it. And slowly, you are getting rich because your net worth is increasing.