Net worth is the value of all assets, minus the total of all liabilities.
Knowing your net worth lets you understand your current financial situation and it gives you a reference point for measuring progress toward your goals.
Table of Contents
How to set up a personal net worth statement
Calculate Your Assets
Start by listing your largest assets. For most people, this could include the value of their home, any real estate properties, or vehicles like personal cars or boats. In the case of a business owner, this list would also include the value of their business. Make sure you use accurate estimates of market values in current dollars.
Next, you’ll want to gather your latest statements for your more liquid assets. These assets include checking and savings accounts, cash, CDs or other investments such as brokerage accounts or retirement accounts.
Finally, consider listing other personal items that may be of value. These could include valuable jewelry, coin collections, musical instruments, etc.
Now, take all of the assets you have listed in the first three steps and add them together. This number represents your total assets.
Examples of Assets are the following:
- $250k House
- $2,000 Home Furnishings
- $1,800 Car
- $2,500 Car
- $60,000 Retirement Accounts
- Total Assets: $316.3k
Calculate Your Liabilities
Again, start with the major outstanding liabilities such as the balance on your mortgage or car loans. List these loans and their most current balances.
Next, list all of your personal liabilities such as any balance on your credit cards, student loans, or any other debt you may owe.
Now, add up the balances on all of the liabilities you listed above. This number represents your total liabilities.
Examples of liabilities are the following:
- $8,000 Credit Card 1
- $7,000 Credit Card 2
- $5,000 Credit Card 3
- $20,000 School Loan
- $6,000 Car Loan
- $200,000 Mortgage
- Total liabilities: $246k
Calculate Your Net Worth
To calculate your net worth, simply subtract the total liabilities from the total assets. For this exercise, it doesn’t necessarily matter if the number is negative. Your net worth is just a starting point to have something to compare against in the future.
Repeat this process once or twice a year and compare it with the previous number. By comparing the two, you can then determine if you are making progress or getting further behind on your goals.
Net worth, taking the numbers on the assets and liabilities above, is the following:
- Total Assets: $316.3k Less Total liabilities: $246k Equals $70.3k
- The Net Worth using the examples above is $70.3k
I’ve put together a comprehensive Net Worth Worksheet below. The printable pdf is available for $.99 and the Excel file for $3.00.
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