For a company, shareholders' equity is defined as total assets minus total liabilities. Just like companies, individuals have assets and liabilities. Unlike companies, however, we don't have shareholders. For this reason, the difference between an individual's assets and their liabilities is known as "net worth." Net worth measures how much we would have after paying off all our creditors. Understanding your net worth is an important measure of financial health, both today and over time. It tells us how much we would have if we paid off all our debt. To help you analyze your personal net worth, answer the following questions: 1. Read the Forbes' article "Your Net Worth Probably Won't Land you on the Forbes 400. but it's Still Important to Know." Do you think tracking your net worth is important? Why or why not? 2. What factors influence somebody's net worth? To what extend to you think you can control your net worth? 3. Do you consider yourself to be a saver or a spender? How does this impact your net worth? 4. Complete a personal net worth statement. Below is a sample outline of categories you may include in your personal net worth statement (feel free to adjust them to suit your situation). Assets Cash Stocks Bonds Retirement Savings Home Cars Personal Property Other TOTAL ASSETS Student Loans Car Loans Credit Card Mortgage Other Debt TOTAL DEBT NET WORTH Debts 4 5. Create a hypothetical net worth statement for yourself based on where you think you'll be in 5 years. 6. What steps will you take to achieve the hypothetical, 5-year out net worth statement you created above? 7. What are your financial goals? Do you think they are achievable? 8. What did you learn from this assignment?