What is my liquid net worth? This week we discuss how to calculate your liquid net worth, your liquid assets and why it is important to know these figures.

What is My Liquid Net Worth? 

To explain your liquid net worth, you should first understand a few other terms and that make up your liquid net worth.  Let’s break it down. 

Assets vs. Liabilities

First, we need to understand what is an asset and a liability.

In its simplest form – an asset is something that you own that has value.   It also represents those items of value that can be converted to cash. 

The most common types of assets are cash, property, and people. 

Cash includes monetary instruments (currency) as well as bank accounts, investment accounts, and instruments.

Property is tangible items that can be converted or sold to cash.  Our cars, homes, land, equipment and other valuable items are assets. 

People also hold value.  An example of this would be the value of employees.  

For this discussion, we will be talking primarily about property and monetary assets. 

Liabilities are debts or what you owe to others.  The most common forms of liabilities are credit cards, personal loans, auto, and home loans.  It can also include delinquent taxes, medical bills, and fines. Essentially, any amount of money you owe another person or entity. 

Liquid vs. Fixed (Non-Liquid) Assets

A liquid asset is an asset that is in cash form (or its equivalent, like a bank account) or can be readily converted. 

This includes checking, savings, money-market accounts and also any other asset that can be readily converted.  Another example would be stocks, mutual funds, and commodities because they can be sold fairly easily and converted into cash. 

A fixed asset or non-liquid asset are items that are not readily converted into cash, such as your home, vehicles, land, and equipment.

Liquid Assets

Your 401(k) and other retirement accounts like an IRA (Individual Retirement Account) may not be considered liquid due to penalties and fees assessed if liquidated before you are age 59½. 

Your Net Worth 

To calculate your net worth, you take the value of all of your assets (liquid and fixed) and add them up and then subtract the total of all of your liabilities. 

It’s a fairly simple equation. 

My Net Worth

Up for debate is whether or not something like the equity in your home is a liquid asset or not.  You may be able to unlock the equity of your home with a home equity line-of-credit fairly easily. If the equity line is not drawn upon – the equity remains an asset; however, once it’s drawn upon, the amount drawn converts to a liability.  

Your Liquid Net Worth

Now that we know what assets are liquid and how to calculate our net worth, it now becomes fairly easy to calculate our LIQUID NET WORTH. 

Liquid Net Worth vs. Net Worth

Your liquid net worth is your LIQUID ASSETS minus your liabilities.  Your liquid net worth may be significantly less than your net worth because your fixed (or non-liquid) assets are not included in your liquid net worth. 

Take the example listed below: 

The Smiths have the following assets: 

Home Valued at:  $200,000.00

Vehicles paid for and valued at:  $10,000.00

Cash in Accounts: $100,000.00

Cash on Hand: $1,000.00

401(k): $300,000.00 

Total Assets: $611,000.00

Total Liquid Assets: $101,000.00

They have the following liabilities: 

Home loan: $175,000.00

Credit Card Debt: $5,000.00 

Civil Judgement for a Failed Business:  $25,000.00 

Total Liabilities: $205,000.00

NET WORTH = $611,000.00 – $205,000.00 = $406,000.00 

TOTAL LIQUID NET WORTH = $101,000.00 – $205,000.00 = ($104,000.00) (NEGATIVE LIQUID NET WORTH)

As you can see, in the above example, the difference between the Smith’s Net Worth and Liquid Net Worth is quite different.  

In the latter example, their liquid net worth is negative.  

My Net Worth Is Negative – Should I Panic? 

Obviously, the ideal is to have a positive net worth. What is important to focus on is shifting those numbers. Increase your assets and decrease your liabilities.

If you are like us, we have significant student loans and that creates a big number is our liability column.  If you know our story, you know we began our financial independence journey with 1 MILLION DOLLARS in debt.  

A good portion of that number is our student loans.  However, we have seen significant gains in our liquid assets and a large decrease in our liabilities in the time we have been tracking our net worth.  

We are focusing on the overall change – not the negative number at the bottom of our spreadsheet.  

We know in time, we will be in the positive.  We encourage you to do that same. 

So why would you want to calculate this figure anyway?  Why is it important? 

Why Your Liquid Net Worth is Important 

Knowing your net worth and your liquid net worth are both important for several reasons.  

One reason is that they are both figures that measure your FINANCIAL HEALTH or financial security.  In other words, if there were a crisis or financial disaster and you needed CASH – how secure are you that you would be OK? 

At the time of this writing, we are in the middle of the coronavirus pandemic.  A crisis, such as this, is one of the biggest reasons to have a healthy liquid net worth and a healthy amount of liquid assets. 


Your Emergency Fund is one major component of your liquid net worth. Experts, like Dave Ramsey, recommend an emergency fund of three to six months of expenses.  This crisis underscores the importance of having a much larger amount in readily available funds. I recommend at least 12 months and possibly more if you are self-employed. 

In general, lenders prefer to loan to people who have cash reserves.  If you have a healthy net worth, and better a healthy liquid net worth, the less of a risk you are. 

On a personal level, having a healthy net worth provides you mental security.  The more debt we have and the less we have available in liquid assets, the easier it is to be vulnerable to a crisis. 

That is why it is important to decrease your liabilities as quickly as possible, while also increasing your liquid assets as well. 

The sooner your liquid assets outweigh your liabilities – the more brighter your financial outlook.  

If you need help in getting your financial house in order – we have several FREE resources to help you as well as our Your Money 101 Financial Workbook that will get you on the right path. 

Keeping track of your net worth is a great way to keep track of your financial progress.  

As mentioned above, our family has been tracking our net worth and it has been super motivating to see our progress since finding the Financial Independence community.  

We shared our progress in this post – and how we felt about our negative net worth.


Tools to Calculate and Track Your Net Worth 

If you are a Spreadsheet Nerd, like myself, you can simply make columns listing your various assets and liabilities. 

This helps me see not only our overall progress, but I can see our progress for each individual asset or liability by itself.  It is good to see our liabilities decrease over time as well as watch our assets rise. 

The road to Financial Independence can be long – so having the visual is a great motivator. 

If you are not a Spreadsheet Nerd, Personal Capital is a great way to track your net worth without having to do too much.  Once you link your accounts, Personal Capital will track it for you. And it’s FREE! 

We hope you have found this information helpful as you continue your journey to Financial Independence.

Love and Prosperity,

Wendy and Curtis





We have created a 130 page bound workbook and journal. 

This workbook will take you step-by-step to get your financial house in order.

You will determine what you are spending your money on, where you can find savings, how to pay off debt quickly and save more money.

If you want to get a firm financial foundation to start your Financial Independence journey, this workbook was created with you in mind.

These are the same strategies we used to get rid of over $650,000.00 and debt, reduce our monthly budget by thousands and buy 4 investment properties that cash flow over $1,000.00 a month!



Another really great tool we have to get you started is the FREE 7 Step Money Foundations e-mail course.

We created both of these resources with you in mind.




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Personal Capital

We use Personal Capital to keep track of our Net Worth, Debt Pay-off and Our Retirement Account Balances.  It’s a good place for us to map our progress and see where we need to make adjustments.


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