In personal finance, net worth (or wealth) refers to an individual’s net economic position; similarly, it uses the value of all assets minus the value of all liabilities. Sounds like something you need an accountant or Financial Planner for. But you really don’t need to make it complicated and learning how to create one is super-easy.
Creating a Net Worth List
The OWN side: Create a list of everything you own. Jewelry, stocks and bonds, investment and retirement accounts, collectibles, vehicles, house(s) and real estate. Anything you could sell, put it on this list. How accurate you want your Net Worth Statement to be will dictate how much stuff you put on this list.
For example: I don’t include household belongings in our Net Worth Statement, just our investment and savings accounts, vehicles, and a little for my wife’s jewelry. There isn’t much of a market for vinyl records from the 80’s so I don’t include them. This also decreases the accuracy of my Net Worth calculation, but I can do it quickly without much research and calculation.
The OWE side: Create another list of anything you owe money for: Credit cards, student loans, family loans, payday loans, car loan, mortgage and HELOCs. Do not include the next lunch that you and your friend go out to because it’s “your turn”, just make it a list of debts.
Calculating your Net Worth
Here is a short, easy to follow video explaining the rest of the process
It’s nice to know where you stand financially. Are you doing well? Is your net worth at least six figures or is it negative? What financial moves could you make to quickly change the total? Call me today and we can work on growing YOUR Net Worth!