Many of us were taught to go to school, get a good job, make a lot of money, get married, buy a nice house and nice cars, have kids, take great vacations and maybe save some of what was left over for a rainy day.

For those who came before us, that lifestyle made some sense, but in those days, working a good job long enough ensured a hefty pension to live off of during retirement. Also, a home mortgage was usually paid off by that time, too, so there were few expenses to deal with in the golden years.

Worst case scenario, if there was no pension, there was Social Security to depend on. For the majority of us, nowadays, those glory days are gone, and the onus is ours to secure a favorable financial future; to ensure that we live a debt-free, healthy, wealthy and exciting life and retirement in our golden years.

When talking about financial freedom, we are really talking about developing thoughts and taking actions-of an investor and a millionaire-to secure a nest egg big enough for a great lifestyle now, and later on in life, for ourselves and others. In the book, “The Millionaire Real Estate Investor,” by Gary Keller and Dave Jenks, the authors write that another crucial area of finances the millionaire investor focuses on is her net worth-a strong measurement of wealth.

When I started on this quest for financial freedom, I thought investing was just a way to make big money now, to get rich quick, and live the life of those I used to see on “Lifestyles of the Rich and Famous.”

I graduated as an accounting and finance major, and learned about how to look at and analyze the finances for a corporation, but never was taught to apply these same concepts and tools to my personal finances.

After reading the books “Rich Dad, Poor Dad” and “Cashflow Quadrant,” by Robert Kiyosaki, though, I finally started to learn what all those financial statements and terms really meant, and how I could use that information to build my own wealth.

I also found out that financial success is not measured by how much money I make, but how much I keep after the bills are paid, and what I do with that money (positive cash flow). This led me to learn the importance of my net worth.

Your net worth consists of three parts: What you own, what you owe and the difference between what you own and what you owe. For instance, if you own real estate, stocks, businesses, etc., and were to sell them all, whatever you can sell them for today would be the total value of your assets. Let’s say, for example, you own a house and rental property worth $400,000, stocks (or money in an IRA or 401k) worth $50,000, a business that you could sell today for $40,000 and a car worth $10,000. That total–the total value of your assets–is $500,000.

Now, look at all of your debts (also called liabilities)–your mortgage, credit cards, business loans, car loans, student loans etc., and the total you owe, if you were to pay the balances off in full today.

Let’s say you owe $250,000 all together for your two property (your home and the rental house) mortgages, $50,000 for your credit cards, $20,000 for your business loans, $50,000 for your student loans and $10,000 for your car loan.

That total–the total balance of your liabilities–is $380,000. Your net worth is figured out by subtracting your total liabilities from your total assets-in this case, $500,000 minus $380,000. In this example, your total net worth would be $120,000. What this means is that if you sold all of your assets and paid off all of your liabilities (leaving you debt-free), $120,000 would be left in your hands (before taxes are paid). This is a very simplified version of what we call a balance sheet, the name for the financial statement that shows your net worth. With this information in hand, take time to list your own assets and your liabilities to figure out your net worth. If you already know it, you are ahead of the game.

Knowing your net worth is vital to your financial life, because this lets you know where you are on the wealth-building scale. Track and analyze your assets, liabilities and net worth monthly (at least) and yearly to find ways to increase your net worth. Here is a quick and fast method to use to see how well you are doing with your net worth-take a look at your net worth, look at your present expenses for the year, and see how long (i.e., how many years) you would be able to live off of your net worth without working a job. How does it look? Let’s apply this method to the example we used earlier. There your a net worth was $120,000, so you know you have $30,000 in total expenses each year. That means, without working a job or having any steady income, you would be able to survive on that nest egg of $120,000 for about four years. Like I said, this is a quick and fast method, so it is not perfect. What it does, though, is get you to start seeing how your net worth relates to your present and future financial life and how it affects your goals and dreams. Tracking, analyzing and planning your net worth is one of the keys to getting you out of the rat race of life, the never-ending cycle of working to pay bills.

Finally, understand that real wealth-building lies in planting a seed now for some time in the future, and it takes time. I learned that the hard way, but you don’t have to. Know that when you invest in anything in life, it takes some time for the fruits of your labor to manifest–in relationships, businesses, investments, etc. So, take the time to track, plan, learn about and grow your net worth. Your financial freedom depends on it.

Nannette Atuahene-Barrie is a real estate consultant, educator and investor who specializes in helping you to become financially free-when you buy a home, sell a home or invest in real estate-through good money management principles and practices. She holds financial literacy workshops regularly in Palmdale. Find more information at