HOW TO CALCULATE YOUR NET WORTH



Net Worth = What you OWN-What you OWE


Assets (What you OWN)

• Cash (bank, mobile money)

• Shares (MSE, global stocks)

• Businesses

• Land / Property

• Pension / Investments

• Vehicles (realistic resale value)


Liabilities (What you OWE)

• Loans (bank, SACCO, personal)

• Mortgages

• Credit/overdrafts

• Unpaid obligations


Example:

• Assets = K150 million

• Liabilities = K40 million

Net Worth = K110 million


Important Shift


Most people think:

“My salary = my wealth”


Wrong.

Your net worth is your real financial position.


2. UNDERSTANDING CASHFLOW FROM ASSETS


Not all assets create wealth.

The real question is:

Does this asset PAY YOU or COST YOU?


Cashflow Assets (GOOD)


These put money in your pocket monthly:

• Rental property

• Dividend-paying shares (NBS, NBM, FDH etc.)

• Businesses

• Treasury Bills / Bonds


Example:

• Shares paying dividends

• Rent collected monthly


These build freedom.


Consumption Assets (WEAK)


These take money from you:

• Personal house (no rent)

• Cars

• Lifestyle items


They are not bad but they must be controlled.


My Rule:

“Income first. Lifestyle later.”


3. HOW TO TRACK YOUR CASHFLOW


Ask yourself monthly:

• How much is coming from salary?

• How much is coming from assets?


Your goal:


Move from 100% salary → to increasing % from assets


Target Journey:

• Stage 1: 100% salary

• Stage 2: 80% salary / 20% assets

• Stage 3: 50% salary / 50% assets

• Stage 4: Assets fully cover your expenses


That’s financial independence


4. BEST ASSET SPLIT (DIVERSIFICATION)


There is no one-size-fits-all, but here is a practical African/ Malawi-friendly model:


MY PORTFOLIO MODEL


1. Income Assets (40%–50%)

• Dividend stocks (MSE)

• Treasury Bills / Bonds

• Rental property


Purpose: Cashflow


2. Growth Assets (20%–30%)

• Businesses

• Expansion investments

• Equity in high-growth sectors

Purpose: Wealth expansion


3. Stability / Protection (10%-20%)

• Cash reserves

• Emergency fund

• Insurance-backed savings


Purpose: Survival


4. Long-Term Assets (10%-20%)

• Land

• Pension funds

• Strategic property


Purpose: Legacy


5. SIMPLE PORTFOLIO RULE


Never be:

• 100% in cash 

• 100% in business 

• 100% in property 


Always be:

Balanced. Structured. Intentional.


FINAL TRUTH


Most people:

• Earn money

• Spend money

• Repeat


Few people:

• Measure net worth

• Build cashflow assets

. Create systems


ONE LINE TO REMEMBER:


“Your net worth shows where you are.

Your cashflow shows where you are going.”

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