Net Worth

Your “Net Worth” is kept in a running tally across the top of the screen – and you probably wish it were a lot bigger!

Net Worth and Loans

When you apply for a loan, banks will often ask for a calculation of your net worth. If you make a list of all the things you own and their value, and then subtract your debts, the result is your net worth.

For example, Alice might have $10,000 in a checking account, live in a $500,000 house and drive a $40,000 car but owe $450,000 on the house and $30,000 on the car. Alice has a net worth of $70,000.

$10,000 + $500,000 + $40,000 – $450,000 – $30,000 = $70,000.

But Bob might have $10,000 in a checking account, live in a $200,000 house and drive a $20,000 car but owe $50,000 on the house and $5,000 on the car. Bob has a net worth of $175,000.

$10,000 + $200,000 + $20,000 – $50,000 – $5,000 = $175,000.

Even though they have the same amount of cash in the bank, and Alice has a nicer house and car, Bob is still “richer”, with a higher Net Worth!

Did You Know?

According to CNN Money, the average net worth of at 30 year old is $9,000; of a 40 year old is $52,000; of a 50 year old is $100,000.

Budget Game Tip: As soon as a bill is issued, your Net Worth goes down, since it is a “debt” you need to pay. Paying off your credit card does not change your Net Worth, since you’re cancelling out the “asset” in your checking account with a “debt” on your credit card.

Now that you know a bit more about your Net Worth, close this lesson to continue the game!

[close]