In the series My Money in My 20's, Mathias Kinyoda once explained the need to start making stable income, investing and reaping from your own money in your 20's. Useful financial decisions should be made in the early stages of their career or life stages where little commitment to family and other items is involved.

In all the making, saving and spending, an indicator of how well, or badly off you are doing financially should be put in place to ensure you stay on the right track all the time.

Investopedia's article Why You Should Know Your Net Worth in Your 20s goes a long way to explain to us why having these indicators and useful tips will help you make meaningful use of your money. The article says Net worth is how much you've saved so far and how much money you owe to others. The balance between what you have, and what you ACTUALLY is yours.  In your 20s, you are unlikely to have a lot of money or assets, but a lot of debt (also called 'liabilities'), so why would you bother learning about your net worth if you already know it's in the negatives?

Here are a few reasons why, according to the article;

Income Does Not Equal Wealth
If you make a lot of money, but you spend all of it, you are not any wealthier than someone who makes less money, but does exactly the same thing. Both of you would have saved a big fat zero.

People who make a high income aren't necessarily the best at saving it, and those who make less money may just as well be more frugal and better at saving. At the end of the day, it seems like only the ones who are able to save their income instead of spending it are wealthier than those who don't.

Set Goals by Net Worth, Not by Income
Income is fickle. It can change for better or for worse and is not something you can truly control. So, it's really what you save from your income that matters. If you set goals by net worth, you'll know if you are on track to meet your financial goals, and if you aren't, you'll know by how much you're off. You'll also have complete control over your net worth because you're the one who's spending your money or saving it.

You should consider setting net worth goals for where you'd like to be in two years, five years, 10 years, 20 years and up until when you plan on retiring; then check each year if you're on track to meet your goals or not.

How Long Until You're in the Green?
If you took out a student loan to pursue some form of post-secondary education, having a positive net worth after graduating is the main goal, even if it's just KES 100.

If you track your net worth yearly, you'll know exactly how long before you have a positive net worth. It may even motivate you to save more money by reducing expenses to reach that goal. For instance, if you are only KES 0.5 million away from having a positive net worth, suddenly you may be re-thinking an expensive purchase, just to reach that goal.

Calculate Your Net Worth
You can calculate it month-to-month, but it should be done at least on a yearly basis to see how far you've come financially from the year before. For instance, if you have KES 2 million in the bank, but you owe KES 1.5 million in loans, your net worth would be in the black at KES 0.5 million. However, more likely than not, at this point in your life you probably owe more than you own, so your net worth would actually be in the negatives.

The Bottom Line
The bottom line is your net worth will always be an important number to know at any age because it is a true benchmark of your financial position, and even if your net worth is in the negatives, it is still important to see if you are on track to meet your financial goals.

Read more: http://www.investopedia.com