What is net worth and how it is useful?

What exactly do you mean by net worth? The amount by which an organization or individual’s resources exceed its liabilities is known as net worth.

When it comes to counting, Assets are things that you or your entrepreneurship owns, liability are things that you or your entrepreneurship owe to someone else , so therefore net worth in simple language means your actual worth.

This is a very important aspect as normally an organization compares itself to the other to observe its standing.

An organization which has a positive net worth is well financed and thus is able to finance its current operations without fearing or defaulting in paying its suppliers and other liabilities.

When an organization does not have enough assets to settle or clear its obligations is known as a negative net worth. There is a general fear that the day-to-day operations may stop functioning in the organization and the creditors may have to run after the organization’s assets to satisfy their obligations.

This also means that the organization is more of a type where it is actually owned by its creditors rather than its owners.  Therefore impending ‘net worth’ in this unusual way (read holistic) keeps things in outlook and can provide various opportunities for us to get all assets as well as providing an opportunity to  actually calculate the cost of carrying non-financial liabilities during our life time. It also acts as a reminder for us to focus purely on money as a calculation of ‘net worth’ is a very simple and potentially devaluing vantage issue.

So, how does one increase its net worth?

Here are a few points to focus on:

1)            Try and save un-necessary expenditure. Put a budget together and stick to it.

2)            Focus on eco-friendly initiatives such as saving electricity and water if you are paying for them from your own pocket.

3)            Buy your necessary stationery from a wholesale store

4)            Avoid usage of phone calls until and unless absolutely required

5)            Walk more and try to avoid usage of vehicles. You can use public transport too.

Increasing your network is also another way of increasing your net worth. Networking is nothing but staying connect with people who are associated with your day-to-day work. Building relationships with people – the people who are related to work and higher the quality of these people, the better.

It is all about developing a rapport and staying connected to these people for a long term relationship.

Remember, developing support is the key to this relationship and over a period of time, when you develop trust, you know that you have these people in your database forever.