Lead:

For ordinary people, they can never get rich by relying on their wages, and only through effective investment can they accumulate considerable wealth relatively quickly by making their money flow. Before investing, you have to calculate how much capital you have, and capital management is the beginning of a sound investment.

In this world, if you want to have a lot of wealth, you have to rely on the accumulation of capital, you have to rely on capital to operate. For ordinary people, they can never get rich by relying on their wages, and only through effective investment can they accumulate considerable wealth relatively quickly by making their money flow. Before investing, you have to calculate how much capital you have, and capital management is the beginning of a sound investment.

To figure out how much capital we have, we can compile a statement of personal net worth based on financial statements that we often see in daily life. We all know such a formula: net worth + net worth - liabilities, so to determine our net worth can take the following steps:

Step 1: Identify the asset. In economics, assets are generally divided into current assets, long-term investments, fixed assets, intangible assets, etc. Current assets refer to assets that can be realized or consumed within a business cycle of one year or more, generally including cash and bank deposits, short-term investments, receivables and prepayments, inventories, etc.; Long-term investments refer to investments that are not intended to be liquidated within one year, including investments in stocks, bonds and other investments; Fixed assets refer to assets with a service life of more than one year, a unit value above the specified standard, and assets that maintain their original material form during use, including houses and buildings, machinery and equipment, transportation equipment, tools and appliances, etc.; Intangible assets refer to assets that have been used for a long time without physical form, including patent rights, non-patented technologies, trademark rights, copyrights, land use rights, goodwill, etc.

Step 2: Determine the liability. In economics, liabilities are generally divided into current liabilities and long-term liabilities according to the speed of repayment or the length of time for repayment. Current liabilities mainly include short-term borrowings, notes payable, accounts payable, interest payable, accounts receivable, employee remuneration payable, taxes payable, dividends payable, and other payables. Long-term liabilities include long-term borrowings, bonds payable, long-term payables, etc.

Step 3: Calculate your net worth. Net worth = assets - liabilities, net worth is the part of cash you get after selling all your assets and paying off all your debts.

Even people with more net worth may still face financial hardship, as the lower liquidity of assets means that there may not be enough cash to cover current expenses. Net worth is not the cash available to you, but rather a measure of your financial situation at a given time. Compile an annual or semi-annual net worth statement, and if your net worth has increased, then your financial situation has been improving. If you set aside a fixed amount of money each month for savings and investments, your financial situation will improve faster.

The Personal Net Worth Statement gives you a clear picture of your income and expenses, it is a good way for us to manage our cash and is the starting point for our investments.