Your Net Worth Is Not Your Self Worth

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Your Net Worth is Not Your Self Worth! Paradoxically your Net Worth is closely linked to your Self Worth.

The Journey to financial freedom is about consistently increasing both.

As I have said before, your life is your business and your income statement, together with your balance sheet are your two wealth cooking measures showing you how successful you are in the money aspect of the business called your life.

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The balance sheet shows whether your business – your wealth, is growing or shrinking. In nature if something isn’t growing it’s dying. A Net Worth that isn’t growing each and every month is a sign of a sick wealth kitchen and a load shout to you that you need to change something.

You can only know if your Net Worth is growing or shrinking by measuring and tracking it and you do this with your Balance Sheet.

Notice any resistance you may have to doing this.

Perhaps you don’t want to see a negative net worth. Remember this is not your SELF WORTH!!!!

You must know where you are now to start the journey – so strap yourself in.

You are becoming a wealth chef and to do that you must have these tools in your wealth kitchen.  Now’s the time to empower your wealth cooking with the tools you need. Please don’t over value your assets and be completely honest with your levels of debt.

Great – now I’m going to share with you how to create your own Balance Sheet.

In The Wealth Chef book  you will find a template for your Balance Sheet and at the back of the book is a code for you to get all your wealth cooking tools in electronic format.

You are about to discover how far you are in creating your wealth feast. You are about to determine your current Net Worth.

Start With Your Assets.

Add up all the things you own that add money to your pocket.

This will include:

  • the current value of your pension plan, both your personal and company pension plans if you have both;
  • the current market value of your home;
  • the current market value of any income generating investment property you own;
  • the value of any equity investment portfolios you have be they shares or mutual funds;
  • the current market value of any business you own i.e. what you would get for it if you sold it now;
  • the market value of any intellectual property you own directly This is a bit tougher but take 60% of the annual income you earn from these products and use that as a rough estimate for now.


Note, we are not including any cars you own, your furniture, your beach hut, your jewelry, your shoe collection or grandma’s tapestry. These are not income generating assets
.

You see these things sit in what Robert Kiyosaki calls the doodad pile. These are the things you choose to have but they have no role in your wealth creation.  Other doodads include your clothes, your music system, the holiday you went on, your flat screen TV. It’s all just stuff.

For the purposes of your wealth cooking all the other stuff you own are just nice to have’s but have no wealth cooking value. In fact they are often not even nice to haves especially of they resulted in your going into debt, but more on that another time.

Add the assets together and that is the total of your asset drawer.

Now subtract the value of your current home, i.e. the place you live, if you own it.

You are doing this because, although your home has real value unlike most doodads, it isn’t an income generating asset as long as you are living in it and so it isn’t part of your wealth feast.

We are only interested in assets that contribute to your wealth feast.

Now that you have completed the asset part of your balance sheet, let’s fill in the liabilities.

Over to the Dark Side – Your Liabilities

Dig deep and be really honest here. Add up all the things you owe.

Your liabilities include:

  • The mortgage on your home;
  • mortgages on investment property;
  • any car loans you have;
  • student loans;
  • credit card debt;
  • debt owed on store cards;
  • Any personal loans you owe;
  • Any hire purchases you’ve taken on

Although you have excluded your car and your home as a wealth cooking asset, you must include any loans you have against these in your liabilities drawer.

Add up all you liabilities to make up the total of your liability drawer.

Don’t panic if your liability drawer is fuller than your asset drawer. Well maybe just a bit because uncomfortable is good, it causes change. That’s why we are here, to do something about it.

What’s Your Current Net Worth?

You might want to sit down when you get to this part.

Minus the total of all your liabilities from your investment asset total.

This is your current net worth and the current status of your Wealth Feast Mass.

For 95% of the population this is negative.  Meaning they have more liabilities than assets. And that picture never changes until they stop working and sell their house tfino hopefully release some money.

Their house may be full of everything that opens and shuts, they might drive fancy cars and wear the latest designer clothes, but in reality they are broke. If you fall into this category don’t despair. Just the fact that you are reading this, actually know where you are financially and prepared to do something about it puts you is a tiny minority of financially savvy folk.

By the time you have mastered the Wealth Chef recipes you will know how to reduce your expenditure and increase your quality of life at the same time; how to increase your investment contributions so your asset pot grows bigger quicker and how to get yourself debt free and be well on your way to financial freedom with a big fat healthy wealth feast supporting you.

You can get all the Recipes for Wealth and all your Wealth Cooking Tools from the brand new The Wealth Chef  book – get your copy today.

Let me know how it goes? How does it feel knowing exactly where you are now financially? What aspect of creating your own balance sheet surprised you most? Please share by leaving a comment below.


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4 Comments

  • monica says:

    that was a wonderfull excersise,i was encouraged

  • claus says:

    This was a great exercise and your material provided just the right motivation to get it done. I ended up reviewing all my policies as well and I’m not so sure I have the best portfolio so will have to make some changes to free up more money for investment. Now I’m looking forward to learning tips for allocating money to asset pool

  • lebo says:

    Hi Ann

    what about a car that I use for my business , to transport people and receive payment. Will this car not fall under income generating assets?

    • Sherri says:

      Lebo if your vehicle is paid off fully then what you are earning from taxi fares goes into your assets. But first you… take into account insurance, maintenance costs and petrol costs.

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