What is your Financial Net Worth?

Most of us would have filed our income tax returns recently and would have heaved a sigh of relief. We would have been cursing at the amount of tax that we have paid for the income earned and would be wondering that what is point of earning when almost 25% of my income is being taxed and there is no way that you can save it. The point is that income tax is just a sunk cost and should be treated as another expense in your budget list.

However the point should be to look at the investments you have made and the returns they are giving you. This should be your focus and that brings us to the point of knowing your net worth at the end of the day. 

Your net worth is all that matters irrespective of the income you earn. Having a positive net worth is a bliss and would constitute to a good financial planning, however having a negative net worth would increase your stress.

So what is net worth, in simple terms, your overall income minus your expenses. Income includes salary, other income, income earned from investments etc, and expenses include your outstanding loans, monthly house hold expenses and any other kinds of expenses incurred. If the net of both is positive then it's a positive net worth, else a negative net worth.

Looking around many people who would have taken a home loan would have a negative net worth, as the cost of property would be higher than their earnings and this would take a long amount of time to get green. For evaluating the current scenario it would be good to remove your outstanding loan amount and re-calculate to ensure you have a positive net worth. 

Maintain a positive net worth:)