KNOWING YOUR FENANCIAL NET WORTH

When your savings and investment increased, means that you have lived within your
budget and expenses and debts, are well handled which will eventually result to your positive
financial Net worth. Financial Net worth defines your financial status in the community. The
higher your Net worth is, the richer you become. So, it's important that you know your financial
status.

1. Ms. Janet has a total asset valued at P10,000,000 while his only liability is amounting to at

2. P2,300,280. How much do you think is his current net worth? What is then your own
understanding of asset? How about liability? Is Mrs. Janet rich? why?

3. Mr. Kyle has a total debts and obligation of P3,550,000 in the bank due to his housing and car
loans. His current savings and investments reach financially stable? Why did you say so?

4. Who among the two do you think able to apply lesson 1 to 3 of this financial literacy book?
Explain.

DEMONSTRATION
You may have a lot properties and possessions but if your total obligation is more than
the value of your total asset. It's means that you are in financial trouble. Net worth should
therefore be always positive for you to be considered financially stable. NET WORTH is defined
as the value of all non- financial and financial assets owned by a person or institutional unit or
sector minus the value of all his/her it's outstanding liabilities.

Net worth of Mr. Ethan's

Net worth is the value of all the non-financial and financial assets owned by a person or
an institutional unit or sector minus the value of all its outstanding liabilities.

Based on the Mr. Ethan’s net worth report, what can you say about his financial planning and
management? Was he able to manage his obligations well? What can you say about his asset’s
accumulation? What do you think his strongest financial habit? Do you think he is financially
free? Why do you think so?
 Your positive financial net worth is the result of your good budgeting, better
Management of expenses and debts accumulated savings and investment. As your financial net
worth increases, the closer you becoming financially free. So, you set your target of your
desired financial net worth then exert all your efforts and the needed financial discipline to
achieve it.

Assets refers to property owned by a person or a company with economic value and
available to meet debts, commitment or legacies or any other financial obligations. It sums it up
the total value of possessions. It may be fixed assets like house and lot, car, personal valuable
belongings like jewelries, appliances, paintings or any other property or it can be liquid asset
such as cash, accounts, investments and the like.

Assets
Assets refers properly owned by a person or company with economic value and
available to meet debts, commitments, or legacies.

Assets Current value

House and lot ₱ 6,500,00

Car# 1 ₱ 1,350,000

Car#2 ₱ 800,000

Total ₱ 8,650,000
 Liquid Assets
Assets Current value

Checking account ₱ 200, 435

Saving account ₱ 103,800

12- month time deposit ₱ 500,500

Retirement account ₱ 3,035,000

Investment portfolio ₱ 2,000,700

Total ₱ 5,840,435

Personal Items
Assets Current value

Engagement ring ₱ 80,500

Diamond earrings ₱ 50,650

Antique armoire ₱ 50,350

Painting ₱ 45,050

Total ₱ 226,550

In smartest sense, a real asset is something that puts more money in your pocket or
account. So, some assets can't become a real asset if it takes money out of your pocket. For
example, a cellphone can become a real asset if you use it for online marketing in selling
products and make money out of it. But if it only takes money out of your pocket by buying
load with no purpose of return, then it is a waste of resources, thus, it is not a real asset. Even if
you sell it, you will not make more money because it depreciates so the selling value is lower
than your purchase value.
Task 2
List down your real asset from your current asset. What is the total monetary value of
all your assets. How many of these assets are giving you more income?

How will you convert these assets into a real asset? How will you increase your real assets
liabilities on the other hand are legally binding obligations that are payable to another person
or entity. This can be a short term such as credit cards payables or personal loans. This should
always be manageable and lower than one’s asset to avoid personal bankruptcy.

Liabilities
Liabilities are legally binding obligations that are payable to another or entity.

Long Term Liabilities.

Remaining principal

Mortgage ₱ 95,000

Student loan ₱3,500

Car loan #1 ₱ 8,400

Car loan #2 ₱3,000

Total ₱ 109,900

Short-Term Labilities
Outstanding balance

Credit card#1 ₱ 8,500

Credit card #2 ₱8,230

Credit card#3 ₱ 4,650

total ₱ 21, 380