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: *Cash *Money held in checking & savings accounts *Money market accounts *Cash equivalents *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).

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