Your net worth: Why it matters

Working is an enriching experience because your efforts are rewarded with a pay cheque. Along the voyage, you desire to have dreams accomplished.

Your net worth will substantially be defined through your personal finance habits and exhibited in monetary terms.

Globally, the likes of Forbes, and others recognise people on their amassed wealth that is figuratively their net worth.

Aventino Beinomugisha is both employed and an employee, who owns a number of private businesses. Right from a youthful age, he has been endowed with a good attitude towards work.
This has grown his revenue base through a number of assets and has been capable of taking on his seven siblings.

“Estimated to be worth Shs2 billion, he argues, knowing one’s net worth is good because it shows the measurement of your strengths, efforts and weaknesses and how much one would love to achieve in accordance to a given timeline,” Beinomugisha shares.

Sidi Miya, Straight Forward Financial Growth coach, says net worth is the direct comparison of the income one is earning. If I have a good worth, that directly gives me a test of how much income I can earn. It is very easy to structure and have a clear base of one’s earnings.

Miya justifies the need for one to know their net worth so that they are intentional.
“Many of us don’t normally have financial targets but we have targets in line with social aspects like when we want to further studies, get married and buy a car or house. We don’t take time to think about the financial targets.

If something can’t be measured, it’s not achievable. Finding out your net worth is one of the ways of measuring your financial growth and having a target,” Miya says.

Mr Kelvin Kiyingi, a Havard trained financial inclusion coach, simplifies net worth as assets or money owned by someone minus all liabilities that include debts, overrated costs and financial obligations.

It’s important to know your net worth so that one can budget their money accordingly. If you don’t know you net worth, you will be in deficit. That is why some people at the end of the month have nothing left or can’t manage to live within their means.

How to strategise
Miya explains that you earn money in four ways through inheritance, marrying into it, winning the lottery or working for it.

“Majority work for it. If you work for it, it is important to know your value per minute because once you focus on work (getting income), you build your net worth. Your earnings can be saved and used to buy assets to grow your net worth,” Miya says.

Kiyingi advises people to live within their means however much they earn. Also, understand the difference between a need and want. Only spend on needs. For instance, if you are thirsty, you can either take water or juice or soda but water will satisfy the need by quenching the thirst hence soda is a want.

“You must have your own goals that you would like to fulfil. Focus your eyes and be intentional on the goals. This motivates you to attain them. Avoid peer pressure so that you stick to personal development and mind your business,” Mr Kiyingi advises.

What is net worth?
Net worth is the value the assets a person or corporation owns, minus the liabilities they owe.

Knowing your net worth lets you understand your current financial situation.
It also gives you a reference point for measuring progress toward your goals.