Step 4 of 6 in Money House
Next in your path: 5.7.2 Fraud Prevention: recognise and respond
This course is education only, not personal financial advice. It gives no recommendation to buy any product or investment. Rules and amounts change, and everyone's situation is different. For decisions about your own money, consult a licensed professional (for example a certified financial planner, a licensed insolvency trustee or a licensed insurance agent).
Before this course: Personal Finance Basics: Budget, Save, Pay Off Debt (course 5.1). You should already have a spending list, a budget, an emergency fund target and a debt table. This course builds a longer-term plan on top of them. Registered accounts (TFSA, RRSP, FHSA) are covered in course 5.3 and credit scores in course 5.2, so we do not repeat them here.
Imagine a backpack. Inside are the things you own. Hanging outside are IOUs you owe to other people. Your net worth is what is left if you took out everything you own and paid back every IOU. It is a photo of today, not a grade.
| Assets | Amount | Liabilities | Amount |
|---|---|---|---|
| Chequing and savings | $4,000 | Credit card | $2,500 |
| Car (market value) | $9,000 | Car loan | $6,000 |
| Retirement savings | $6,000 | Student loan | $8,000 |
| Total assets | $19,000 | Total liabilities | $16,500 |
Net worth = $19,000 - $16,500 = $2,500. These numbers are invented for practice.
Videos by other creators on YouTube, for reference. They are not made by or affiliated with The Future Market.
[Host] "Before you plan where you are going, you need to know where you are standing."
[Text on screen: Net worth = what you own - what you owe] "That number is your net worth. Assets minus liabilities."
[Screen: a two-column table, Assets and Liabilities] "List what you own at today's market value. List what you owe. Subtract."
[Text on screen: negative? Debt comes first] "If it is negative, the government's consumer agency says to work on repaying debt first."
[Host] "It is not a grade. It is a starting line."
Build your own net worth table today with real numbers. Save it, write the date, and set a reminder to update it in 12 months. Keep it private.
Copy this, open Claude, paste it, and Claude will walk you through the lesson step by step.
For a grown-up: Claude is for adults (18+). Copy this, paste it into Claude, and use the answer to explain the lesson to your child.
I'm learning "Personal Finance Planning: goals, insurance and debt plans" on The Future Market. Lesson 1: "Where you stand today: your net worth". What the lesson teaches: - The FCAC says a financial plan answers three questions: where you are today, where you want to be, and how you will get there. - Net worth = assets minus liabilities. Assets are what you own (savings, investments, a car, a home). Liabilities are what you owe (credit cards, loans, a mortgage). - The FCAC describes three steps: list your assets at their current market value and total them; list your debts and total them; subtract debts from assets. - If the result is negative, your debts are bigger than your assets. The FCAC says the priority is then to repay debt as quickly as you can. - Get Smarter About Money (the Ontario Securities Commission's investor education site) says a plan starts by gathering four areas: what you own, what you owe, what you earn and what you spend. Good sources are bank and investment statements, loan papers, pay stubs and credit card bills. - Update your net worth regularly. One number matters less than the direction it moves over time. The exercise I'm working on: Build your own net worth table today with real numbers. Save it, write the date, and set a reminder to update it in 12 months. Keep it private. I'm stuck. Please: 1. Explain the main idea in plain, simple words with one everyday example. 2. Walk me through the exercise one small step at a time. Ask me what I've done so far before giving the next step. 3. Don't just give me the final answer. Help me do it myself, and check my work when I share it. 4. This is for learning only. Remind me to check with a licensed professional before I make a real decision about my own money, health or legal situation.
I'm a parent helping my child (about 8 years old) with a lesson called "Where you stand today: your net worth" from the course "Personal Finance Planning: goals, insurance and debt plans". Here's what the lesson says: Imagine a backpack. Inside are the things you own. Hanging outside are IOUs you owe to other people. Your net worth is what is left if you took out everything you own and paid back every IOU. It is a photo of today, not a grade. The activity: Build your own net worth table today with real numbers. Save it, write the date, and set a reminder to update it in 12 months. Keep it private. Please explain this so an 8-year-old understands: short sentences, a fun everyday example, and no hard words. Then give me 3 simple questions I can ask my child to check they understood, and a way to do the activity together, one tiny step at a time. Keep it general and educational. This is not advice for a real situation.
This lesson is part of full access: every course and every level for one payment.
This lesson is part of full access: every course and every level for one payment.
This lesson is part of full access: every course and every level for one payment.
This lesson is part of full access: every course and every level for one payment.
This lesson is part of full access: every course and every level for one payment.
This lesson is part of full access: every course and every level for one payment.
This lesson is part of full access: every course and every level for one payment.
What is net worth?
Assets minus liabilities.
What three questions does a financial plan answer?
Where you are today, where you want to be, and how you will get there.
What does SMART stand for?
Specific, Measurable, Achievable, Relevant, Time-bound.
What does inflation do to the buying power of money?
It lowers it over time, because prices rise.
What is a deductible?
The part of a claim you pay before the insurer pays the rest.
Does term life insurance have cash value?
No. It pays only if you die within the term.
If you name no beneficiary on a life insurance policy, who gets the money?
Your estate.
Does debt consolidation reduce how much you owe by itself?
No. It combines debts into one payment.
Who can help you with serious debt problems in your country?
A licensed professional, such as a credit counsellor or insolvency trustee, found through your country's official authority.
What usually happens to a public pension if you start earlier than the standard age?
The monthly payment is reduced.
What usually happens to a public pension if you start later than the standard age?
The monthly payment is increased.
Where can you check whether an advisor is registered?
Your country's official financial regulator register.
This lesson is part of full access: every course and every level for one payment.
This lesson is part of full access: every course and every level for one payment.
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