Section 2.1 Your Personal Financial Landscape 45
Assets
An asset is an item of value that you own, such as cash, stocks, bonds, real
estate, and personal possessions. Assets are divided into two basic categories:
¶ Current assets. These assets, also called liquid assets, include cash and
savings that can be converted to cash quickly and easily.
¶ Fixed assets. These assets include investments, such as stocks, bonds,
and invested funds, that are set aside for long-term goals, such as the
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home, auto, personal possessions, and other durable goods that enrich
your life through use.
Assets tend to change in value from year to year, so you will want to list
them at their current or market value. This amount is an estimated worth at
the time you make your net worth statement.
Liabilities
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and charge accounts, and the amount you borrowed for lunch last week.
¶ Long-term liabilities. These liabilities include obligations to be paid over a
long period of time, such as an auto loan or a home mortgage.
Net Worth
Your net worth is the difference between your assets and liabilities. If
you own more than you owe, you have a positive net worth. This means
that you can meet your financial obligations and possibly reach some of your
important financial goals.
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term wealth means an abundance of money and other assets. It includes
investments, property, a business, cash, and other items of value that
contribute significantly to financial security and a high standard of living and
giving.
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not essential. Pay credit debts and do not take on more credit obligations.
Consider ways to increase income by working more hours or assuming more
responsibilities on the job. A job change or additional training may also lead
to higher income. Do all you can to create a positive net worth.