How much money do you really have?

Are you in a financially strong position, or are you heading for a late retirement down the track?

Your financial ‘net worth’ is simply your assets minus and liabilities you have, giving you your true financial status.

Also read: 8 most outrageous tax return claims revealed

Savingsguide.com.au has put together 3 steps to find out how much money you really have.

1. Calculate the value of your assets

What assets do you own? Do you have a car, house, trailer, boat, shares, and so on?

Also read: 5 easy ways to save a deposit for your first home

Assets also include savings accounts, term deposits and other investments.

2. Calculate your liabilities

Liabilities are any type of debts – car loans, personal loans, credit cards and mortgages.

3. Calculate your net worth

How much money would you have left over if you sold all your assets and used the money to pay all of your debts?

Simply subtract total liabilities from total assets = this is your net worth.

Also read: Will falling house prices trigger the next Aussie recession?

How to increase your net worth

According to Savings Guide.com.au, your goal should be to increase your net worth in two ways.

Growing your assets: ideally you need assets other than cars and boats, as these assets will depreciate over time – you need assets that grow in value over the longer term, things like property, shares, savings accounts.

Also read: Plummeting auction clearance rates pose huge threat to Aussie stock market

Reducing your liabilities: pay off credit cards, pay off personal loans, make voluntary lump sum repayments to any debt you have to rapidly pay it down. Like any debt repayment strategy, it’s often wise to focus on the debts that cost you the most first (e.g. prioritising a high interest credit card over say a student loan debt).