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Remember: Your income isn’t a measure of your wealth, your net worth is. To figure out your net worth, tally up your assets — this includes your investments, how much you have sitting in your savings, and any other assets, like your home or car. Next, tally up your debt. Subtract your debt from your assets and you have your net worth. Net worth gives a full picture because it factors in how much money you make, how much debt you owe and how quickly you’re paying it off. It’s what you have left at the end of the day that’s for Future You. Having a positive net worth shows that you’re financially healthy.
5. How You Spend Your Money
Are you putting your paycheck toward paying off debt, helping your family, or are you squandering it? Not only does how you spend your money affect your progress toward net worth, but it’s ultimately an indicator of what you value. For instance, while I am typically pretty frugal when it comes to clothes, I spend more on good food. There are no right or wrong, it is just a personal preference. Just make sure that you are not overspending or exceeding your budget to indulge in the things that make you happy.
There you have it. Five metrics that are more important than your income. As you can see, while your take-home pay does play a key role in your financial well-being, there are other ways to measure your financial success.
This article was originally published at HiCharlie.com. Recommended Post: Paying my HDB with my CPF after 55 Years Old
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