Money tip – Calculate your net worth
Knowing your net worth is a very important aspect of personal finance. How can you know if you are getting ahead financially if you have no way to track or measure your wealth? If you want to have a benchmark for wealth, retirement or financial fitness, make sure your starting point is your net worth.
I equate knowing your net worth for wealth management to knowing your weight for weight management. Creating a net worth statement is a basic skill you should know and practice regularly.
How to calculate your worth?
Down below, I will give you a list of tools and resources to help you figure out your net worth but really all you need is a pen and paper.
Take a piece of paper and draw a line down the middle of the page from top to bottom. On the left side of the page write down all the assets that you think contribute positively to your financial well-being (not depreciating assets). On the other side of the page, list all your debts or liabilities. At the bottom of the page, take your total assets and subtract your total liabilities and you will have your net worth.
Once you have this starting point, every year, you should redo this calculation to see if you are moving in the right direction. Understanding your net worth is the starting point to financial planning and wealth management.
Personalize your net worth statement
There is no shortage of tools and resources out there to help you figure out your worth. In my opinion, use the one that works best for you.
Here’s a link to a net worth statement I give out to people who attend my financial workshops. It’s not the best or the worst but a great starting point.
Here’s a link to some excel spreadsheets. Don’t expect much. There’s nothing fancy about these worksheets but that’s realty the point. It does not have to be fancy. Incidentally, this is the spreadsheet I’ve been using for years (the long term tab). Mine is personalized for my needs and I would encourage you to do the same for yourself. Take this template and personalize it to your assets and liabilities.
For those of you that prefer links to online calculators, here’s a couple to start with.
I don’t use online calculators to calculate my personal worth so does anyone that wants to share what they have found helpful, please share in the comments.
If you’ve never tracked your worth, it’s time to get started. Using any of the strategies above, make it a priority to complete your net worth statement.
For those of you who are more seasoned at this, help others by sharing he tools, calculators and strategies your use to calculate your net worth.