Net worth

The net worth is the sum of all your assets and liabilities. It's the most important metric for your personal finances as it defines how much you own. You can look at your own net worth for you as an individual or at the combined net worth of your family or any other group.

Assets and liabilities

"Net worth" = "Assets" + "Liabilities"

Assets are things like bank accounts, investment portfolios and real estate. Basically anything that holds a value which can be represented as a monetary value.

On the other side, liabilities are things you still owe to others like a loan.

Division by ease of access

In Walletguide we divide your net worth into liquid, semi-fixed and fixed, which refers to how easy it is to access a certain share of it.

"Net worth" = "Liquid net worth" + "Semi-fixed net worth" + "Fixed net worth"

Liquid net worth includes all assets that you can access anytime. This includes e.g. bank accounts and cash and can also be considered as your "Emergency fund" for unplanned expenses. It's usually recommended having at least 6x your monthly expenses in this bucket.

Semi-fixed net worth includes assets that you can access in the short-term, but it may not be as easy as for the liquid net worth. This could include e.g. specific investments like ETFs, that you can sell at any time but is has some effort. In the end it's up to you to determine if you consider an asset to be part of this section.

Fixed net worth includes assets that you cannot access easily. This includes e.g. real estate, as you would need to start a complex selling process to get the corresponding amount of money for it.