WHAT IS NET WORTH?
Considering that I have a little (healthy!) obsession with money and growing our savings, I’ve never calculated our net worth until now.
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In the most basic sense, your net worth is the value of everything you own minus the debt you owe.
Businesses calculate their net worth to see how profitable they are, to track their growth, and the value of their business.
Calculating your personal net worth is a quick way to see your financial health status.
WHAT DOES NET WORTH MEAN?
This number can be positive or negative depending on how much debt and savings you have.
If you net worth is negative it means that you owe more than what you own.
When I graduated college I owed about $37,000 in student loans. I was still living at home with my parents and didn’t have any other debt. I had some money in my savings account. My net worth at that time was probably about $-29,000.
HOW TO CALCULATE YOUR NET WORTH?
The Net Worth Formula is:
You Total Assests – You Total Liabilities = Your Net Worth
Examples of Assets
– The value of your home
-The value of your cars
-Savings accounts, retirement funds
Examples of Liabilities
-Mortgage
-Car loans
-Student loans
-Credit card debt
NET WORTH CALCULATORS
The hardest part of calculating your net worth is getting all your numbers together.
Keep in mind these numbers will change. For example, right now my car may be worth $10,000, but as the years go on it will be worth less and less.
How to calculate your personal net worth
Schwab offers a free personal net worth worksheet for people to use. Just plug in your numbers and voila!
Net Worth Calculator Excel Worksheet
Microsoft offers a Excel worksheet which is also a great way to keep track of your net worth over time.
Net Worth Video
A fellow financial blogger, Kristin of Cents and Purpose, calculates her own net worth for the first time in this video.
She provides a lot of great commentary as she plugs in her own numbers.
WHAT IS MY NET WORTH?
After tallying our assets and our liabilities, as of April 4th…
Our net worth is $212,898.71
Depending on your own financial situation this number may sound impressive or super sad.
I take this number with a grain of salt because there’s more to it than just this one number.
It’s also the line items that go into calculating your net worth.
Maybe you recently purchased an investment property or needed to get a new car. Perhaps your investments in the stock market are having a bad quarter or a really good quarter.
Don’t beat yourself up over a low number, but definitely work on improving it.
WHY YOU SHOULD TRACK YOUR NET WORTH
Calculating your net worth is a great way to see how your financial health is doing month to month, by quarter, or even by year.
Even though this number isn’t everything, your goal should be to see it increase over time.
If you keep track of your net worth it can become a great visual reminder and motivator to keep improving your net worth.
Related posts on saving money:
* Important financial goals to achieve
* 13 Fast ways to improve your financial condition
* Simple things we stopped buying
HOW TO INCREASE YOUR NET WORTH
A few ways to increase your net worth are paying off your debt, making more money, and investing.
Starting a blog, cutting your existing expenses, and budgeting come to mind.
We significantly increased our net worth when we paid off all of our credit card debt. My plan is to increase our investments and pay more towards our mortgage.
WHAT IS YOUR NET WORTH
At the end of the day, it’s always a good idea to track your finances (e.g. you income, debt, and savings).
If you know how much you make and spend you can predict KNOW how much you can save.
Some people don’t include their cars or homes in their net worth calculation because of their depreciation value, but that’s up to you.
Calculate you net worth and see what your financial score looks like today!
Don’t forget to pin for later!
