Sample Liquid and Total Net Worth Calculation

Example of the week

Assets: Liquid assets can be readily converted to cash without loss of value (checking, savings, money market accounts, CDs, stocks, bonds, ETFs, mutual funds). Illiquid assets cannot be liquidated (retirement accounts before reaching qualifying retirement age) or can only be liquidated slowly or at a discount (real estate, private businesses, art, jewelry, collectibles).

Liabilities: Short-term liabilities come due within one year (credit card balances, consumer loans, property taxes). Long-term liabilities have multi-year payoff periods (mortgages, car loans, student loans).

Liquid net worth: The preparedness for emergencies (job loss, medical expenses) is measured by liquid net worth defined as liquid assets minus short-term liabilities.