## 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!

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