Liquid Net Worth: Meaning and Calculation
Many people are familiar with the phrase "net worth" because it's a straightforward calculation that quantifies your financial assets.
To calculate your net worth, you simply subtract your total liabilities from your total assets.
Liabilities = any debt you owe
Assets = money (including investments) or property you own of value
Liquid Net Worth is what you have in cash or cash equivalents after you subtract your liabilities from your liquid assets.
Liquid Assets = assets that can quickly and easily be cashed out without losing value
Examples of liquid assets are:
*Money held in checking & savings accounts
*Money market accounts
*Stocks & bonds (outside of retirement accounts)
How to increase your liquid net worth:
*Pay down debt
*Save more money
*Sell non-liquid assets
*Boost your income
How much should you have in liquid assets?
Emergency fund money is a liquid asset. Try to at least have a fully funded emergency fund (3-6 months of expenses).
Swipe up to learn more about liquid net worth and grab your free printable budget binder template.