It is not what you currently have that determines whether you are rich or poor. The fact that both my wife and I can be living in a big house in a luxury suburb, driving two Mercedes Benz and taking our young people to an expensive school does not automatically mean that we are accumulating ABC Net Worth wealth like Ali Baba of Arabian History nights
Actually, there is something else, and bank managers and other credit institutions love it.Do you know what that thing is? I’ll tell you in a moment.
Get ready for a shock in your system!
Well, what most bank and credit institution managers love to see on their desk before they can even think about doing business with you is a financial document … actually, a financial statement, like most of people like to call him.
And the name of the financial statement is.
Net value statement!
What is a net worth statement?
In a nutshell, a net worth statement is a financial document that shows your personal net worth (or actual value, what really is worth in financial terms.It is the total remaining balance after deducting your total liabilities calculated from your calculated total assets) .
The balance that remains after carrying out this simple mathematical calculation is its net value or its “real value”.
Your net worth statement is a document that informs other people or any interested person, such as a bank manager, a credit institution, etc., whether rich or poor. In other words, do you have enough assets to cover your debts in case you have to pay a loan, for example, at short notice?
Your Net Worth can also tell others if you are moving forward, backing away or simply staying in the middle of financial life.For example, a plus amount next to your amount $ 350 678.00) means that you own more than you owe to others.
The problem is if your net worth shows an amount less (-) (- $ 350 678.00), it simply means bad news for you. Or it means that your total liabilities exceed your total assets, and you owe others more than you currently have. And your rivals see this as another way of saying that your fortune is gone … finished … kaput.
Or “He’s dead!”
Why I say that?
This is because after your creditors have sold everything you have to cover your debts, there will be no more money left in your name. And the worst part is that you will still be asked to pay more to the other creditors whose outstanding accounts remain unsatisfied.
But the fact that it has a net value of minus (-) does not necessarily mean that everything has been lost. You see, most people know that life is like a roller coaster. Sometimes, and without your fault, things can go crazy. For the richest or poorest.
And for those who are fortunate enough to know this, a net worth of minus (-) is the catalyst they need to propel them to new heights of financial freedom.
This is because as soon as they face a problem like that, they do everything in their power to bring more money and assets to their chests to balance the disadvantages in their net worth statement.
Still wondering why it’s called Balance?
Have you analyzed your net worth or have you dedicated part of your valuable time to balance your assets and liabilities lately? If not, today is the right time to make sure that your financial statements are a true reflection of your true wealth.
Also, if he does not, how will he know if he is advancing, retreating or simply standing in the middle of financial life?
In another article, I will show you how to calculate your net worth.