Your Wealth, Health, And Lifestyle Newsletter

How To Determine Your Personal Net Worth

By: Jason Markum

Over the years one question that I get asked over and over is this; how do I calculate my personal net worth? It’s true that most Americans have no net worth or negative net worth. Is it any wonder when we don’t even know how to calculate our net worth?

Since the massive recession of late 2008 Americans have become more frugal. We are saving more, and spending less. That is one good thing that has come out of this recession. And as we pare down our credit card debt and put some money aside for a rainy day, Americans are beginning to have net worth’s once again.

Which leads us to the question, how do you calculate your net worth? It is, after all, the basic method of determining if you’re getting ahead in life… well, getting ahead in your financial life at least. First things first, you need to recalculate your net worth often. Quarterly is okay, but I recommend calculating your network every single month. It just helps keep things in your mind, it helps keep you on the path to financial responsibility
if you’re always looking at your financial net worth calculations.

The first thing to calculate is your assets. These are things like cash and non-income producing assets as well as insurance, investments, and retirement assets. Cash is easy to figure, it’s just that amount of cash you have in any checking or savings accounts or in money market funds and CDs. Non-income producing assets are things like the value of your home, or your vacation home, or jewelry, cars, home furnishings, or stuff like that. Insurance is easy to determine as well as your insurance policies have cash values (some don’t). Likewise, investments are fairly easy to calculate especially if you receive monthly statements from your brokerage firm. And finally retirement assets are also fairly easy to calculate using statements from your brokerage firm.

The second thing to calculate his liabilities, what you owe. Liabilities include mortgages, bank loans, credit cards, and any notes due.

Now just add up your assets and you liabilities. Subtract your liabilities from your assets. That is your net worth!

Don’t get discouraged if you have a negative net worth, most people do. Just be sure, once you know your figures, to work on lowering your liabilities as much a possible.

Knowing your personal net worth is something that every responsible adult should do. It is a great tool that helps you know how well you’re doing financially and lets you know when things are getting bad or better.

So go figure out your personal net worth right now, it’s never too late to start being financially responsible.

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