What Is Liquid Net Worth And How to Calculate It

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If you’re asking this question, you probably already have a pretty good handle on your personal finances and are looking to dive deeper.

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While net worth is an important measure,

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To take a popular example, Amazon founder Jeff Bezos has a total net worth of almost $200 billion,

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Liquid Net Worth Definition

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Net Worth vs. Liquid Net Worth

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When considering your liquid net worth vs. your net worth,

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The Importance of Liquid Net Worth

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What Is Liquid Net Worth And How to Calculate It

If you’re asking this question, you probably already have a pretty good handle on your personal finances and are looking to dive deeper.

What is your liquid net worth?

While net worth is an important measure,

I would argue that liquid net worth is even more important to determine your financial health.

To take a popular example, Amazon founder Jeff Bezos has a total net worth of almost $200 billion,

but his money is tied up in the value of his company and can’t easily be accessed.

Liquid Net Worth Definition

Liquid net worth is simply the amount of cash you would have available after selling all of your liquid assets and paying off your current liabilities.

Net Worth vs. Liquid Net Worth

Your net worth is the total value of all of your assets (things you own) minus your liabilities (things you owe).

When considering your liquid net worth vs. your net worth,

your liquid net worth only counts your liquid assets and your current (not long-term) liabilities.

The Importance of Liquid Net Worth

Your liquid net worth essentially acts as an emergency fund of sorts, and helps you understand how much money you would have available if you had an emergency.

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