We typically refer to a person being "wealthy" if they have a high net worth. This number reflects the total amount of money a person has in assets minus all debts. Even if a person has no salary, if he or she owns a large amount of property or stock and has no debt to his or her name, he or she may still be assigned an extremely high number. The number will often reflect how well a person has handled his or her money in his or her lifetime. Averages of these numbers typically increase with age. Those with a negative number have most likely made some poor decisions that have landed them deeply in debt.
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Calculating Net Worth
A person who has an equal number of assets and debts will have a financial worth of zero. This is because the number is calculated by subtracting a person's total amount of debts from his or her total amount of assets. Therefore a person who has $30,000 in assets, but $10,000 in credit card debt, has a net worth of $20,000.
Negative Net Worth
These numbers are not always positive. A person who has $10,000 in assets, but has $15,000 of student loan debt, will have a negative net worth. In the event that there is an extreme difference between assets and debts, bankruptcy may be considered as a recovery option. Chapter 7 bankruptcy can eliminate some debts, causing a person's financial worth to increase. Over time, the number may be significantly increased in the event that the person becomes financially responsible, acquiring assets and paying off debts.
Visit the website of the Milwaukee bankruptcy attorneys of the DeLadurantey Law Office, LLC, for more information about filing for bankruptcy.
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