Your “Net Worth” is kept in a running tally across the top of the screen – and you probably wish it were a lot bigger!
When you apply for a loan, banks will often ask for a calculation of your net worth. If you make a list of all the things you own and their value, and then subtract your debts, the result is your net worth.
For example, Alice might have $10,000 in a checking account, live in a $500,000 house and drive a $40,000 car but owe $450,000 on the house and $30,000 on the car. Alice has a net worth of $70,000.
$10,000 + $500,000 + $40,000 – $450,000 – $30,000 = $70,000.
But Bob might have $10,000 in a checking account, live in a $200,000 house and drive a $20,000 car but owe $50,000 on the house and $5,000 on the car. Bob has a net worth of $175,000.
$10,000 + $200,000 + $20,000 – $50,000 – $5,000 = $175,000.
Even though they have the same amount of cash in the bank, and Alice has a nicer house and car, Bob is still “richer”, with a higher Net Worth!
Now that you know a bit more about your Net Worth, close this lesson to continue the game!