Liquid Net Worth: What It Is, Why It Matters And How You Calculate It

In personal finance, people are always talking about their net worth. You would always see people interested in finding out their or other people’s net worth.

What is net worth? Simply put, net worth is the total of your assets less your liabilities. When your assets are bigger than your liabilities, you have a positive net worth.

Liquid net worth is hugely underappreciated. Yet, knowing and understanding your liquid net worth can be the determining factor in how healthy your life really is

What Is Liquid Net Worth?

Liquid net worth = liquid assets – liabilities. This is a similar formula compared to the regular net worth.

Why Is Your Liquid Net Worth Important?

Your liquid net worth represents the amount of money that you have on hand to pay for different things in your life.

What Is The Difference Between Net Worth And Liquid Net Worth?

Net worth is all of your assets and liabilities combined. Liquid net worth only looks at your liquid assets and liabilities.

What Qualifies As A Liquid Asset?

A liquid asset is something that you own that can be quickly converted to cash while keeping its market value.