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Here’s How To Determine Your Net Worth

Here’s How To Determine Your Net Worth



Here's How To Determine Your Net Worth

A typical discussion amongst guys during a regular hangout, most especially after a few drinks is on the financial status of successful Nigerians. After a lot of raised voices, the discussion attempts to find resolution by speculating on the amount of cash in the said individual’s bank accounts, the value of the individual’s assets and the amount of cash the individual owes the banks (assuming the former CBN governor has been so kind to expose the individual’s precarious loan book with the banks)

At this point of the conversation, the argument dissolves due to lack of information to further buttress their point. The stubborn ones in the group remain steadfast about their position which is supposedly based on the privileged hearsay of financial activities – as you know, this is Lagos; everybody knows somebody that knows somebody that knows somebody.


Ultimately, to win such arguments, there is a need to pull together sufficient information to determine the true financial status of the individual. While we tend to worry about the wealth of others we know nothing about, we fail to track our own net worth which should act as a base for what we plan to build in the future. And no, it’s not just by looking in the cash you have in the bank account!

[Read also: Investing & Gambling: Differences and Where They Intersect]

If you are wondering how to calculate your net worth, today is your lucky day. To get a good indication of your financial condition you will need know how to prepare two simple financial statements. The first statement tells you exactly what you are worth today and is subject to change on a daily basis. The second statements tells you whether your net worth based on your current activities is going upwards or downwards.

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Prepare a balance sheet

A balance sheet shows you the difference between what you own (your assets) and what you owe (your liabilities) which sums up to your net worth.

To get started, you will need to list all assets and liabilities:

Examples of assets: Cash, investments, house

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Examples of liabilities: all types of loans – car loan, house loan, payday loan

After calculation your net worth and you have a negative status it simply means you owe more than you own. There are simply two ways to increase your net worth: increase your assets or decrease your liabilities.

Prepare a cashflow statement

In order for you to understand whether your net worth is likely to increase or decrease, you need to identify your cash inflows and outflows to help you calculate the net cash flow. Cash inflows generally include your income: salaries, interest earned on investments or savings, dividends while outflows include: utilities, food supplies, rent, transport fare.

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To determine your net cash flow you simply subtract your outflows from your inflows. A positive cash flow indicates that you have earned more than you have spent giving you some excess money that you can use to buy investments like mutual funds, houses or even reduce some of your liabilities. This is typically a good indication that your net worth is increasing with time. On the other hand, assuming the value of your assets do not appreciate, a negative cash flow which indicates that you have spent more than you have earned will lead to decreasing net worth . In this scenario, you will have to re-evaluate your spending pattern.

To put it briefly, to know your financial condition, you will need to be aware of your net worth and spending pattern and knowing how to prepare both financial statements will guide you in improving your financial status.

This article was originally published by Nairametrics, July 14th, 2014



Nairametrics is Nigeria's top business news and financial analysis website. We focus on providing resources that help small businesses and retail investors make better investing decisions. Nairametrics is updated daily by a team of professionals. Post updated as "Nairametrics" are published by our Editorial Board.

1 Comment

1 Comment

  1. Kingsley

    June 6, 2019 at 11:02 am

    Thanks for this boss!

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FG announces schedule for 4th evacuation flight from the USA 

The evacuees will be expected to present an original COVID-19 negative test result not older than 14.



flights, Nigeria sets conditions for border reopening, COVID-19: Nigerians in diaspora have not asked to be evacuated – FG, Attacks on Nigeria diplomatic residence, FG to engage Ghanaian government  

The Federal government has approved the fourth evacuation flight for Nigerians stranded in the United States of America for July 28.  

According to a statement that was signed by the Consulate General of Nigeria, the Ethiopian Airline with flight number ET509 will depart Newark Liberty International Airport, New Jersey on Tuesday 28 July 2020 by 21:15hrs and arrive Nnamdi Azikiwe International Airport, Abuja on Wednesday 29 July 2020 by 13:25hrs. 


“All prospective evacuees duly registered with any of the three Nigerian missions in the USA should purchase their one-way tickets at a cost of $1250 for economy class and $2800 for business class for adult/child fare including all taxes with the usual percentage reduction for infants under 2 years,” the statement read. 

READ ALSO: FG acquires profiling robots for airport

In line with the earlier announced protocols from the Nigerian Presidential Task Force on COVID-19, the evacuees will be expected to present an original COVID-19 negative test result not older than 14 days on the day of departure at the airport. 

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There will also be a temperature check at the airport, and any intending evacuee with a body temperature above 38°c or any symptoms suggestive of COVID-19 will not be allowed to check-in. 

Evacuees are also required to wear a face mask as a matter of necessity and be in possession of hand sanitizer for intermittent use during the flight, while also adhering to the instructions of the  

Furthermore, all returnees are enjoined to adhere strictly to all instructions of Port Health Services (PHS) officials and observe other entry screening protocols on arrival. 

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Hospitality & Travel

Covid-19: British High Commission to resume visa application in Nigeria

Nigerians who want to visit the UK can do so as soon as international flight operations resume.



Covid-19: British High Commission to Resume Visa Application in Nigeria

The British High Commission in Nigeria has announced plans to resume visa processing in the country. It revealed that it will soon begin receiving visa applications from Nigerians who want to travel to the United Kingdom (UK).

This was disclosed in a public statement by the British High Commission in Abuja on Thursday, July 9, 2020.


It said that Nigerians who want to visit the United Kingdom can do so as soon as the international flight operations resume in the country. The statement said:

“We know there are many Nigerian nationals hoping to be able to travel to the UK when flights resume, both for employment and to see family members.

“UKVI are working closely with TSL contact, our commercial partner, to reopen visa application centres that were suspended due to COVID-19. UK visa application centres are reopening in phased manner globally when it is safe to do so and when we can operate an effective service.

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“TSL contact are putting appropriate measures in place and working hard to reopen in Nigeria. We will share details of when VACs will reopen soon,”

READ MORE: US to stop issuing visa for Birth Tourism 

It can be recalled that the Federal Government had shut down the airports to both domestic and international flight operations in March as part of measures to contain the spread of the coronavirus disease.

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Following the gradual resumption of domestic flight operations, Nigerians are expecting that international flight operations might be resuming soon.

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Nigeria’s excess crude account falls to $72 million

Nigeria’s excess crude account has now fallen by a whopping 98% in just 5 years.



Capital market to get more tax incentives - FG , FEC reviews Ajaokuta-Kaduna-Kano gas project contract, approves $2.571 billion, FG to reduce N1.5 trillion from 2020 budget due to coronavirus

Nigeria’s Excess Crude Account (ECA) now stands at $72 million as the country continues to grapple with an unprecedented revenue crisis not seen since the early eighties. The ECA account has now fallen by about 98% within the last 5 years.

The information on the excess crude account was revealed by the Minister of Finance, Zainab Ahmed in a National Economic Council Meeting during the week. The ECA is a savings account retained by the Federal Government and is funded by the difference between the market price of crude oil and the budgeted price of crude oil as contained in the appropriation bill.


There were major concerns last November when it was reported that the ECA balances held just $324.5 million one of the lowest balances recorded at the time. At $72 million the ECA is in low territory highlighting the effect of the fall in crude oil prices this year. Crude oil prices have crashed to sub-zero in March and have risen back o just over $40/barrel in recent weeks. However, it still remains low from Nigeria’s previous budget benchmark.

ECA in the news

About a year ago Nairametrics reported Nigeria’s Excess Crude Account has dropped to $480 million. This is as controversy continues to trail the $1 billion military spendings which were withdrawn from Nigeria’s Excess Crude. According to the Central Bank of Nigeria’s annual report for 2018, Nigeria’s crude excess account fell from $2.45 billion in 2017 to $480 million as of December 2018.

(READ MORE: Rising COVID-19 cases in world’s biggest economy falter crude oil prices)

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Just 5 years ago (August 2015) the ECA stood at $2.2 billion. This was the early days of the Buhari administration. It was $3.6 billion in February 2014, one of the highest balances on record. That same month, at its monthly FAAC, the government agreed to remove fuel subsidy from its books. Fuel subsidy is currently being borne by the NNPC.

The Controversies: Last year, the federal government under President Muhammadu Buhari was accused of mismanaging the country’s Excess Crude Account especially the $1 billion reportedly spent on military equipment.

  • The National Security Adviser (NSA) retired Major General Babagana Monguno Gen. Babagana was quoted to have disclosed that he was not aware of the whereabouts or disbursement of the $1billion drawn from the ECA by the Buhari presidency in 2017 for security purposes.
  • While controversies trail the statement credited to the NSA, with many describing it as diversion of public funds, the Presidency provided some explanations.
  • Responding to the allegations, Senior Special Assistant on Media and Publicity, Garba Shehu, disclosed that various procurements had been made for the purchase of critical equipment for the Nigerian Army, the Nigerian Navy, and the Air Force, contrary to the allegations.

Nigeria’s ECA in retrospect: In Nigeria, there are two Sovereign Wealth Funds: the Excess Crude Account and the Nigeria Sovereign Investment Authority (NSIA). Note that these two are funded by the savings earned when oil prices are at peak.

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  • Hence, as a larger chunk of revenue is appropriated for ECA and NSIA, the country’s external reserves are likely to fall.
  • Note that the sovereign wealth fund was established to address the controversies surrounding the Excess Crude Account.
  • The fund is usually expected to generate revenue to meet budget shortfalls in the future, provide dedicated funding for the development of infrastructure and saves for future generations.

ECA depleted by 98% in 5 years: A closer look at the various annual reports of the Central Bank of Nigeria shows that Nigeria’s excess crude account has now fallen by a whopping 98% in just 5 years.

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