Your salary has increased, your car is more comfortable and you own a home. Yet every month, checking your bank balance still brings a sigh. 

Sound familiar? 

Owning more things does not automatically mean your finances are getting stronger. To understand your position, start with your assets and liabilities. 

What Is the Difference? 

Assets are things you own that have financial value, such as savings, investments, property and vehicles. 

Liabilities are debts you still owe, including outstanding housing financing, vehicle financing, personal financing and credit card balances. 

For example, a car worth RM50,000 is an asset. If its outstanding financing is RM45,000, its value after deducting that debt is only RM5,000, before related costs. 

You need to look at both sides. 

What Is Your Net Worth? 

Use this simple formula: 

Net Worth = Total Assets − Total Liabilities 

If your assets total RM100,000 and your outstanding debts total RM80,000, your net worth is RM20,000. 

This gives you a clearer picture of your financial position. Use current asset values rather than original purchase prices. 

However, net worth is only part of the picture. A property has value, but you may not be able to turn it into cash quickly during an emergency. 

Small Instalments, Bigger Commitments? 

“It is only another RM150 a month.” 

That sounds manageable. Add it to several other instalments, however, and your remaining salary starts shrinking. 

For civil servants, salary deductions make repayments convenient. Each deduction still reduces the money available for family needs, savings and emergencies. 

Before taking on another commitment, ask: 

• Do I really need this purchase? 

• How much will I pay in total? 

• Will I still have room to save? 

Take One Simple Step 

Set aside 15 minutes this week to list your assets, outstanding debts and monthly expenses. 

Financial progress can begin with growing savings, falling debt and more breathing room each month. 

Review your assets and liabilities today. Are your finances getting stronger, or are your commitments simply getting bigger?