Are you on track to reach your financial goals? Are you saving enough for retirement or falling short? Will there be enough money for your child’s college education? A net worth statement can help you find those answers. You’ll get a snapshot of your current overall financial situation and quickly determine how close you are to meeting your goals. Let’s get started.
Choose a calculation method
Calculating your net worth is quick and easy. It’s simply a grand total of everything you own minus everything you owe. There are many online calculators designed to help you determine your net worth. You’ll be asked to plug in details about your assets and liabilities to find your net worth. You can also perform the calculations yourself. Whether you use a digital tool or a pen and piece of paper, here’s how your net worth is determined.
List your assets
1. Start by listing the market value of your largest assets, including things like your home, rental property, vehicles and boats.
2. Now, look at your financial statements. List the value of your liquid accounts. These include checking, savings, money market accounts, CDs and cash on hand.
3. Next, write down the value of any pensions, profit-sharing plans, 401(k) plans, IRAs and life insurance cash values.
4. Finally, estimate the value of your personal property. These items include jewelry, coin collections, antiques and art.
5. Add up the value of these assets to get a grand total.
List your liabilities
1. Write down your largest debts first. Look at home mortgages and other large debts like vehicle and boat loans.
2. Next, list your credit card balances, as well as any outstanding student and personal loans.
3. Add up all your liabilities to get a total.
Find your net worth
The last step is to subtract your liabilities from your assets to find your net worth.
Hopefully, your net worth is a large, positive figure. If not, you may want to rethink the balance between your assets and liabilities.
The advice provided is for informational purposes only. Consult a financial advisor for additional guidance.
Article provided by Local Government Federal Credit Union.