How to Calculate Your Net Worth and Know Your True Value

• During the vetting process, Cabinet candidates are required to disclose their net worth, with some disclosing significant increases in the value of their assets
• PKF Consulting Corporate Affairs Director David Kuria explained in detail the net worth calculation process
• Home Affairs candidate Kindika’s declared net worth has increased by KSh150 million to reach KSh694 million by August 2024.
• This prompted detailed explanations regarding the sources of his newfound wealth, as in the cases of Alice Wahome (land documents) and Soipan Tuya (defense)

Muyela Roberto is a business journalist at TUKO.co.ke, she has over 9 years of experience in digital media and offers an in-depth look at the Kenyan and global economy. trends.

Since the vetting process for Cabinet positions began on Thursday, August 1, net worth has been the talk of the town. During the vetting process, candidates must declare the value of the real estate they have accumulated over time.

Ruto Cabinet Candidates Declare Their Assets

Candidates re-elected to the cabinet by President William Ruto had to go to great lengths to explain the change in their financial status that had occurred over the past two years of their tenure in cabinet.

For example, Home Affairs Minister-designate Kithure Kindiki had to explain how his wealth had increased by KSh150 million. When he joined the cabinet in late 2022, Kindiki declared his wealth at KSh544 million. As of August 2024, his assets had increased to KSh694 million.

“I have houses and vehicles, and I also run a law firm. Before I became CS, some people owed me legal fees and they paid a significant amount when I took over,” Kindiki said.

TUKO.co.ke caught up with David Kuria, Corporate Affairs Director at consulting firm PKF, who shed light on how a person’s net worth is calculated.

According to the Curia, the net worth of an estate can be estimated by each person independently, but for a more professional and accurate approach, especially in cases where someone has a large fortune, the most accurate results will be obtained by professional valuers.

“Net worth involves determining the value of all personal assets and then subtracting personal liabilities to arrive at the net worth of a business or individual. Personal assets include, but are not limited to: Cash and cash equivalents: Cash in banks and cash on hand. Investments: Stocks, bonds (including government bonds), mutual funds, and sometimes retirement plans.

Real Estate: Residential homes, investment properties, and land. Personal Assets: Vehicles, art, and other collectibles. Other Assets: Life insurance (cash value) and business property,” Kuria explained.

To determine the value of each asset, he shared that different methods can be involved. For example, in the case of cash and cash equivalents and stock market investments, the latest bank, investment and retirement account statements as of a specific date are obtained.

If you determine your value at the end of December, you will receive your statements at the end of December.

In the case of real estate, land and buildings, you will receive a valuation or current assessment of the market value of these properties, which may be prepared by an appraiser, i.e. an independent person.

“For other items, such as vehicles, art and collectibles, you can look at market prices to determine the value of those assets,” he added.

Another part of your personal net worth is liabilities. Liabilities can include mortgages, loans, credit cards, and other debts, including unpaid taxes and medical bills.

With mortgages, as with cash and cash equivalents, you get bank statements. The same goes for loans and credit cards.

In the case of other debts, the amount is directly related to outstanding payments, for example payments to regulatory bodies or medical bills at medical facilities.

To get your actual net worth, you need to calculate your total assets and subtract your total liabilities.

Example:

Suppose you have:

• Cash in bank and hand: KSh 1 million
• Investment in shares (Nairobi Stock Exchange): KSh 2.5 million
• Residence: KSh 10 million
• Vehicles: KSh 2 million
• The total value of your assets is KSh 15.5 million.

Now factor in liabilities:

• Mortgage: KSh 3 million
• Car loan: KSh 1 million
• Credit card debt: KSh 0.5 million
• Your total liabilities amount to KSh 4.5 million.

To get your net worth, take your assets of KSh15.5 million and subtract your liabilities of KSh4.5 million. Your net worth at the end of December, assuming that is the reporting date, is KSh11 million.

Tax liability

If you have any tax liabilities at the end of the period, include them in your liabilities. For example, if you have a total liability of KSh4.5 million and a tax liability of KSh1 million, your total liabilities will increase to KSh5.5 million, reducing your net worth.

Other Stories About Cabinet Candidates Declaring Wealth

Source: TUKO.co.ke