Calculating your net worth is a useful way to gauge your financial health and track your progress toward your financial goals. Your net worth is essentially the difference between what you own (your assets) and what you owe (your liabilities). Here's how you can calculate it:
STEP 1. 📝 **List Your Assets**: Start by making a list of all your assets. Assets are things you own that have monetary value. Common assets include:
💰 Cash on hand and at the bank, the toal value of your investment portfolio, including stocks, bonds, mutual funds, and retirement accounts like 401(k)s and IRAs. 🏡 Also include Real Estate, 🚗 cars, motorcycles, boats, or any other vehicles you own. If you own valuable articles such 💎 jewelry, art, antiques, and collectibles, add them to the list as well. 🏢 Self employed individuals should also add the value of their shares in the business.
STEP 2. 📝 **List Your Liabilities**: Next, list all your liabilities. Liabilities are debts and financial obligations you owe. Common liabilities include:
🏠 Mortgages balances, 🚗 outstanding balance on any car loans,📚 student loans, 💳 The total amount of credit card debt you owe,💸 Any other personal loans or debts you may have 💼 or any other financial commitments.
STEP 3. 💰 **Calculate Your Net Worth**: To calculate your net worth, subtract your total liabilities from your total assets:
📊 Net Worth = Total Assets - Total Liabilities
Your net worth can be positive, negative, or zero. A positive net worth means that your assets exceed your liabilities, which is typically a healthy financial position. A negative net worth means you owe more than you own, which indicates financial trouble. Zero net worth means your assets and liabilities are equal.
It's important to regularly update your personal net worth calculation as your financial situation changes. Tracking your net worth over time can help you monitor your progress toward financial goals and make informed financial decisions. 📈💰🎯
We also offer a free online tool which lets you track personal wealth and calculate your net worth by just listing your accounts. Sign up today at bit.ly/Plan2day