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How to Calculate Your Liquid Net Worth and Know What You’re Worth

Inside: This guide will teach you how to calculate your liquid net worth and discover just how much cash flow you really have.

Knowing your liquid net worth gives you a snapshot of your financial health and can be a helpful tool in making sound financial decisions.

Are you curious about your net worth?

When you know your liquid net worth, you can see how much money you have available to you right now, and you can use that information to help you be financially stable.

It is important to understand the difference between liquid net worth and regular net worth when calculating one’s financial position.

Having a healthy liquid net worth gives us a financial cushion to fall back on in times of need, and can help us grow long-term wealth.

In the post, we will because what your liquid net worth is and how you can use this number to your advantage.

This guide will teach you how to calculate your liquid net worth and discover just how much cash flow you really have. By reducing expenses and building a strong investment portfolio, you can increase your wealth over time.

What is liquid net worth?

Liquid net worth is different from regular net worth in that it only takes into account assets that can be quickly and easily converted into cash, such as stocks and other liquid assets.

Just like net worth, you take your liquid assets minus any liabilities to reach your liquid net worth.

To calculate one’s liquid net worth, it is necessary to subtract liabilities from the total value of one’s liquid assets. By doing this calculation, individuals can gain insight into how much they are actually worth in terms of their financial position.

What is liquid net worth vs net worth?

A picture showing the words net worth for different amounts of money change a person's net worth

Regular net worth, on the other hand, takes into account all assets, including non-liquid assets like real estate or retirement accounts.

Liquid net worth is a useful number to calculate if you want to get a better understanding of your spending and savings habits.

What are examples of Liquid Assets?

An asset that could be quickly liquidated.

– Cash
– Saving and Checking accounts
– Taxable Brokerage account with Mutual funds, ETFs, or stocks
– Money market accounts
– Precious metals like gold and silver
– Accounts receivable

Why is liquid net worth important?

A picture of a spreadsheet with an illustration of a person's finances, with a calculator next to it and the words "How to Calculate Your Liquid Net Worth" written in text

Liquid net worth is an important indicator of financial health because it represents the amount of liquid assets you have available to cover both everyday and unexpected expenses.

Having liquidity is key to financial stability, as it ensures you can pay your bills and make necessary purchases.

By improving your liquid net worth, you can take control of your day-to-day finances, while still building long-term wealth.

What assets To Include to calculate liquid net worth?

Picture of a notebook with the words liquid assets to represent different assets and a dollar amount beside each one

1. Cash on hand

Cash on hand is considered an asset when calculating one’s liquid net worth because it is easily convertible to other forms of money, and it typically does not incur any fees or market value considerations when liquidating.

In some cases, CDs may have a prepayment penalty which should be taken into account when calculating the total liquid net worth.

2. Checking and savings accounts

An image of online bank account with numbers in it, with the caption "How much is in my account?"

Checking and savings accounts can be a great way to increase one’s liquid net worth.

When separate checking and savings accounts are opened, it makes it easier for people to resist the temptation of spending and instead save money.

Furthermore, setting up automatic payments helps to avoid the temptation of overspending.

Having a savings plan and understanding one’s liquid net worth is important to prevent having to rely on debt or other forms of emergency funding.

3. Money market accounts

A Money Market Account is a type of savings account that provides a higher rate of return than traditional savings accounts.

It can be used to save money for unexpected expenses or to invest in long-term goals.

4. Investment accounts

A picture of someone looking at opening an investment accounts.

Investment accounts play an important role when calculating one’s liquid net worth as they can generate higher returns than savings in bank accounts when invested in the stock market. Traditionally, the stock market returns average 10% a year.

Furthermore, investment accounts provide an opportunity to increase one’s liquid net worth and build passive income.

Unless you are over the age of 59 1/2, you would not include any retirement accounts like multiple Roth IRAs in your liquid assets.

5. Precious metals, such as gold and silver

Precious metals are important in calculating liquid net worth because they are not included in personal assets and can be sold at a high price.

These valuable assets can increase one’s net worth significantly, especially when rare and liquid.

6. Accounts receivable

Picture of a lady who is reviewing her accounts receivable.

If you are a business owner, then accounts receivable play a key role in calculating liquid net worth. Accounts receivable is a current asset and represents money that the company is owed by its customers.

As a current asset, it can be quickly converted into cash, meaning that it qualifies as a liquid asset.

When calculating liquid net worth, accounts receivables are added to the total liquid assets and subtracted from the total current liabilities. This helps to give an accurate picture of a company’s financial health and liquidity position.

It is important to note, however, that there is typically a small percentage of bad debt associated with aged receivables, which means that not all accounts receivables will be converted into cash. Therefore, it is important to take this into account when calculating liquid net worth.

What assets are not included in liquid net worth?

A picture of dollar bills with an increasing net worth arrow.

1. Retirement accounts

Retirement accounts are not included in liquid net worth because withdrawing money from them before retirement can incur tax penalties.

This applies if you are trying to access your retirement assets before the age of 59 1/2. If you are over that age, then retirement accounts would be considered liquid net worth for you.

Additionally, it is not recommended to raid retirement accounts if one needs money quickly. Despite this, it is important to recognize that retirement accounts still have value and one can take contributions starting at age 59 1/2.

2. Real estate holdings

A picture of a small house showing the value of a house over time

Real estate holdings are not included in liquid net worth because they are not typically sold or liquidated quickly.

Selling a house can take a long time, and the costs associated with closing on the sale can be quite high.

Additionally, if someone needs to sell their home quickly, they may have to accept a significantly discounted offer.

3. Business Equity

Business equity is often not included in liquid net worth because it can be difficult to convert to cash and sell, particularly if the business is closely associated with the individual personally.

Additionally, selling business equity may take a long time and be impractical or difficult to do.

4. Life insurance policies

Picture of a life insurance policy showing a person's current life insurance policy and how much money is currently insured

Life insurance policies are not included in an individual’s liquid net worth because the cash value of these policies takes longer to access than other financial assets, such as savings accounts.

This means that it is more difficult to access the funds from a life insurance policy in a short amount of time.

5. Personal property of value

Personal property, such as furniture, cars, or other physical possessions of value, is not typically included in a calculation of liquid net worth since it is more difficult to convert into cash.

These items are reflective of an individual’s lifestyle and may take time and effort to sell for monetary value.

Additionally, some personal property may decrease in value over time which could affect the overall assessment of net worth.

How to Calculate liquid net worth?

Picture of a calculator to show how to calculate liquid net worth.

Your liquid net worth is an important number to know.

It represents how much you are worth if you had to sell all your assets and pay off all your debts. So, let’s calculate your liquid net worth.

Step #1: Evaluate your assets

It is important to evaluate one’s assets when calculating their liquid net worth because it gives you a better understanding of how much you are actually worth.

Create two lists:

  1. Liquid Assets listed above
  2. Non- Liquid Assets of everything else

For balances, use the most current cash balance available on your account. This is part of creating a personal financial statement.

Step #2: Review and reduce your liabilities

A picture of a wrench with coins to make sure you reduce your liabilities and debts.

Next, you need to subtract any liabilities to reach your liquid net worth.

For example, you need to subtract any outstanding credit card debt as your cash would be diminished to pay these credit card debts.

Also, by paying down debts and reducing the amount owed, not only can one lower the amount of interest they have to pay, but also make it easier for you to save money and create a better financial future.

Strategies such as a debt snowball or debt avalanche can help individuals reduce their liabilities more quickly, allowing them to calculate an accurate liquid net worth that reflects how much they are truly worth.

How to Calculate Liquid Net Worth Example

A picture of person sitting at a computer, looking at a calculator screen with the words "liquid net worth" written on it

Now, let’s look at an example.

Your assets include:

  • $500 in checking
  • $2000 in a savings account
  • $10000 in high interest online saving account
  • Your home is worth $450,000
  • Car is worth $35000
  • Retirement balances of $175,000
  • Taxable brokerage account of $5000

Total Assets = $677,500 and Total Liquid Assets = $17,500

Your liabilities include:

  • Mortgage on your house of $325,000
  • Car loan of $27,500
  • Credit card debt with outstanding accounts of $3500
  • Student loans of $20,000

Total Liabilities = $376,000 and Total Liquid Liabilities = $3,500

Your Total Net Worth is $301,500 and your Liquid Net Worth = $14,000

Why is there such a big difference between total net worth and liquid net worth?

Picture of a couple discussing why total net worth and liquid net worth are so different.

This is why liquid net worth is so important.

Understanding the difference between these two numbers can help one make more informed decisions about their finances.

As your total net worth grows, that is great!

But, if you are looking to start a business or start a house remodel or need cash on hand, this would significantly impact the money available in your liquid net worth.

What are tips to Increase your liquid net worth?

A picture of a laptop and clipboard for helpful tips to increase your liquid net worth.

There are many ways you can increase your liquid net worth! Specifically you want to look for appreciating assets.

That is great news! You just have to be willing to put in the time and effort into the various ways to increase your liquid net worth.

1. Lower Your Expenses

When you reduce your expenses, you are essentially freeing up funds that can be used for other purposes, such as paying off debt or investing in assets.

By making small changes to reduce expenses, you can make a significant impact on your overall financial health.

Additionally, reducing spending also helps individuals become more mindful of where their money is going and encourages budgeting habits that can help them save even more in the long run.

Reducing spending one step at a time is sometimes easier than trying to cut back all at once. By using an app like Trim to negotiate lower bills for items such as cable TV, internet access, and wireless phone service.

Additionally, looking for areas of your budget where expenses could be eliminated can also have a major impact on decreasing costs.

Making small changes over time will allow you to see the effects of each change and make it easier to make big impacts with less effort in the long run.

2. Increase Your Income

This is something we focus on here at Money Bliss! You need to find ways to increase your income and diversify your income sources.

If you want to increase your income, then consider going back to school, starting a business, focusing on real estate investments, investing in the stock market, or looking into side hustles.

It is important to find what works best for you and stick with it to successfully grow your net worth.

Recently, many people have turned to side hustles that may help them earn extra money, such as working from home or finding creative ways to monetize their time.

Learn how to make money online as a beginner.

3. Use Accounting Software to help you

These accounting software are various budgeting apps or software that will easily help you analyze your spending and saving.

Many people shy away from budgeting – however, it is the number one method to make sure you are spending less than you make and better manage your finances.

4. Create a Savings Account and Emergency Fund

Picture of mason jars full of coins for savings and emergency fund accounts.

It is important to have a savings account and emergency fund to build one’s liquid net worth.

When an individual puts money into a savings account, it can be used for future purchases or reaching goals, while the emergency fund can be used for unexpected expenses.

Additionally, by paying yourself first, you can save money and sleep better at night.

5. Build Your Investment Portfolio

Investing is important for increasing one’s liquid net worth, as it enables you to build wealth over time.

Having an investment portfolio can be beneficial in providing multiple streams of income, such as passive income from dividend stocks and using the stock market for a higher return on investment. It also provides stability and security, as well as the opportunity for growth and diversification of their portfolio.

By investing in the stock market, there is the potential to generate a higher return than would otherwise be earned by keeping money in a savings account over time.

You want to diversify your portfolios to maximize gains.

6. Pay Off Your Debt

It is important to pay off debt because it can improve financial security and reduce stress.

  • Paying off high-interest credit card debt helps to save money in the long run. Then, makes it easier to reach financial goals.
  • Prioritize paying student loan debt payments quickly which lowers total interest paid over time.

This is one of the steps to becoming financially secure is to pay off debt. You are unable to make progress fast when you are constantly worrying about paying your liabilities.

7. Spend Less Than You Make

One of the most important steps to increasing your liquid net worth is to spend less than you make.

This can be accomplished by creating a budget, making a weekly spending budget, and paying with cash.

Spending less money than your annual net income is important to see significant progress toward your financial goals.

All of these steps can add up quickly and help you save more money in the long run.


No, a 401(k) is generally not considered part of liquid net worth unless you are close to retirement age and can access the funds without any fees or penalties.

If you withdraw money from your 401(k) before the age of 59.5, you may be subject to penalties and income tax, and so it is not recommended to include the value of your retirement account when calculating liquid net worth unless you are willing to reduce the value by 10%-30% to get a more accurate cash value after penalties.

No, cars are not usually considered liquid net worth as they depreciate too quickly and sell too slowly to be of much use in an emergency.

Liquid net worth includes cash, cash equivalents, and any other assets that can quickly be converted into money.

Non-liquid assets, like cars and boats, do not generally count toward your liquid net worth.

Liquid net worth meaning is the amount of money you have in cash or cash equivalents after liabilities are subtracted from your liquid assets.

It is the value of your liquid assets, such as stocks, treasury notes, money market accounts, and minus liabilities.

Liquid net worth more accurately measures your financial stability than total net worth, as it includes the money you could access quickly if you needed it, such as in an emergency or unexpected expense. It is an important indicator of how well you can handle short-term financial shocks.

Use this Information because Your Net Worth Matters

Liquid net worth is important because it is the cash or quick-to-convert-to-cash holdings that we need to meet everyday and emergency expenses.

Improving our liquidity is a monthly exercise that can have a positive impact on our overall financial well-being.

The significance of calculating one’s liquid net worth is that it provides insight into their financial stability. It measures how much money they would have available in an emergency, as well as their total assets and liabilities.

Knowing your liquid net worth gives you an idea of how much money you have access to in the event of an unexpected expense or situation. This is a helpful tool for budgeting and planning for the future.

Additionally, side hustles can make extra money quickly, thus further increasing their liquid net worth.

All of this will help you make informed financial decisions. Then, you can work towards financial freedom.

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