Connect with us

Hi, what are you looking for?


Why it’s Important to Have a Liquid Net Worth

The amount by which your assets exceed your liabilities is your net worth. Net worth is simply the difference between what you own and what you owe.

Why it's Important to Have a Liquid Net Worth
Photo credit: Uzi World Digital Graphics
What is Net Worth?

Net worth is the difference between a person’s assets and debt. An asset is a piece of property that belongs to a person or a firm and is considered valuable and available to pay obligations, commitments, or legacies.

  • Building
  • Real Estate
  • Car
  • Cash 
  • Stock

A sum of money owed or due is referred to as a debt.

For example:

An individual owns assets worth rs.10,00,000. And owes sums of rs. 3,00,000. The net worth would be equal to Assets – Liabilities = 10,00,000 – 3,00,000 = Rs. 7,00,000

Why it's Important to Have a Liquid Net Worth
What is Liquid Net Worth?

A liquid asset is one that can readily be converted into cash in a short period of time with little or minimal loss of value. Liquid assets are often compared to cash since their value remains constant regardless of whether they are bought or sold. Businesses and purchasers frequently utilize this type of asset. 

The different liquid assets that are more liquid, easily transferable are:

  • Cash in Hand
  • Cash in Bank
  • Stocks
  • Marketable Securities

The type of assets distinguishes net worth from liquid net worth. By deducting available liquid assets from debt, liquid net worth is computed.

In our previous example, the individual had 10,00,000 in assets. If 5,00,000 were not liquid and were invested in non-liquid assets like real estate, the liquid net worth would be equal to

Advertisement. Scroll to continue reading.

Liquid Assets – Liabilities: 

Why it's Important to Have a Liquid Net Worth
What is the importance of Liquid Net Worth?

In general, net worth is a measure of a person’s present financial status. Liquid net worth is concerned with assets that can be converted into cash fast. As a result, liquid assets can be used to complement an emergency fund! Net worth is a fantastic strategy to accumulate money. If you need cash urgently, though, having a liquid net worth is critical. For instance, in the event of an emergency or a lucrative investment opportunity. Liquid net worth is important since it allows you to access funds quickly.

Liquid net worth is concerned with assets that can be converted into cash fast. As a result, liquid assets can be used to bolster an emergency reserve. If you need major repairs or medical bills that your insurance won’t cover, you’ll need an emergency fund.

If a person’s emergency money isn’t sufficient, liquid assets can come in handy!

Here are some ways to improve your liquid net worth!

1. Pay off liabilities: 

Paying off short-term debts is an excellent approach to increase your liquid net worth. Once you’ve paid off the larger expenses that have been looming over your liquid net worth, you’ll be free.

Advertisement. Scroll to continue reading.

2. Save more money/Reduce expenses

Your assets, and hence your liquid net worth, will improve as you save. And, in order to have more liquid assets on hand, you should begin to analyze and reevaluate your spending and expense patterns, and possibly reduce them.

3. Increase Income

Of course, earning more money is one approach to boost your liquid assets. This is why it’s always a good idea to keep an eye out for new ways to make money. You might also consider investing in a business that will provide you with a source of passive income.

Advertisement. Scroll to continue reading.

Hrushikesh Pachbudhe is a News Analyst and Author at Empire Weekly. He is an MBA aspirant and a finance enthusiast. He is a firm believer of “Quality over quantity”, strives towards improving himself every day, and is always eager to learn. He is an incredibly analytical person, yet his desire to explore his creative side led him to work in content writing and development. Amongst his peers, he is known for his punctuality, discipline, and reliability. He aspires to become a successful investor and tackle bigger responsibilities and challenges. Some of his hobbies involve playing football, listening to music, and weight training.

1 Comment

1 Comment

  1. gralion torile

    March 4, 2022 at 8:00 pm

    You can definitely see your expertise in the work you write. The world hopes for even more passionate writers like you who aren’t afraid to say how they believe. Always go after your heart.

Leave a Reply

Your email address will not be published.


Latest News


The twisted teen comedy is back with another season, with romance, a journey to self-discovery, and a lot more craziness.

Exclusive Interview

Peter von Puttkamer is a three-time Emmy Judge and wildlife filmmaker of multiple award-winning series and specials for major networks worldwide over the last...


Laal Singh Chaddha, the Hindi remake of the classic movie Forrest Gump is finally here. But is it worth it? Read the full article...


You May Also Like

Empire Weekly Exclusive

Because of the character's widespread appeal, Iron Man has appeared in multiple comics, television series, and films.

Empire Weekly Exclusive

Tom Cruise is known as a Golden Globe-winning celebrity and a famous producer. By the 1990s, Cruise had established himself as one of Hollywood's...


The main difference between online and offline learning is location. With offline learning, participants are required to travel to the training location, typically a...


A complete system audit of the bank's IT system has also been ordered.