1. The Complete Guide To Calculating Your Net Worth: Introduction
  2. The Complete Guide To Calculating Your Net Worth: Important Terms
  3. The Complete Guide To Calculating Your Net Worth: Why Net Worth Is Important
  4. The Complete Guide To Calculating Your Net Worth: Making Accurate Estimates
  5. The Complete Guide To Calculating Your Net Worth: Calculating Your Net Worth
  6. The Complete Guide To Calculating Your Net Worth: What Your Net Worth Means
  7. The Complete Guide To Calculating Your Net Worth: Building Your Net Worth
  8. The Complete Guide To Calculating Your Net Worth: Conclusion

Calculating your net worth involves subtracting your liabilities from your assets. If you have more assets than liabilities, you have a positive net worth. Conversely, if you have more liabilities than assets, you have a negative net worth. You can create your own net worth worksheet using popular programs (that you might already have) such as Microsoft Word (by creating a table) or Microsoft Excel. These programs can also perform the mathematical aspects of the calculation, thereby reducing the possibility of any math errors. An example net worth worksheet is shown in Figure 2.

Assets Current Value Liabilities Amount
Cash & Cash Equivalents   Secured Liabilities  
Certificates of deposit   Auto loans  
Checking account   Home equity line  
Money market account   Margin loans  
Physical cash   Mortgage  
Savings account   Rental real estate mortgage  
Treasury bills   Second home mortgage  
       
Investments   Unsecured Liabilities  
Annuities   Credit card debt  
Bonds   Medical bills  
Life insurance cash value   Personal loans  
Mutual funds   Student loans  
Pensions   Taxes due  
Retirement plans   Other debt and bills  
Stocks      
       
Real Property      
Primary home      
Second home      
Rental properties      
       
Personal Property      
Boats      
Collectibles      
Household furnishings      
Jewelry      
Vehicles      
       
       
Total Assets   Total Liabilities  
       
  Total Assets    
  - Total Liabilities    
  Net Worth    

Figure 2 An example net worth worksheet.

Organization
Having organized records is extremely helpful and will help expedite the process of calculating your net worth. For example, if all of your important financial statements are kept in one file cabinet, you will be able to find the necessary information quickly. If your records are not organized, now is a good time to start. Create a "Net Worth" file in which you can keep this and future net worth statements for comparison. If you do not print out your statements and prefer to keep everything on your computer, create a "Net Worth" file on your computer. The bottom line is it's going to be easier (and more fun) to calculate your net worth on a regular basis if you don't have to hunt down every piece of information.

The process
Calculating your net worth is a multistep process. Before beginning the calculation, decide if you want to calculate net worth individually (you) or jointly (you and your spouse/partner). Also, gather all of your financial statements (such as bank statements and credit card statements) for reference.

The first time you calculate your net worth may take the longest. Once you figure out the methodology and how to value your assets, however, the process will likely take less time. The following section shows how to figure your net worth using a step-by-step approach, starting with your assets:

Assets
Cash and cash equivalents
Determine the amount of cash and cash equivalents that you have, including:

  • Certificates of deposit
     
  • Checking and savings accounts
     
  • Money market accounts
     
  • Physical cash
     
  • Treasury bills

Investments
Determine the current market value of your investments, including:

  • Annuities
     
  • Bonds
     
  • Life insurance cash value
     
  • Mutual funds
     
  • Pensions
     
  • Retirement plans – IRA, 401(k), 403(b), etc.
     
  • Stocks
     
  • Other investments

Real and personal property
Determine the current market value of your real and personal property. Remember, real property includes land and anything that is permanently attached to the land, such as a house. Personal property is everything else. Include:

  • Boats
     
  • Collectibles – antiques, art, coins, etc.
     
  • Household furnishings
     
  • Jewelry
     
  • Primary residence
     
  • Rental properties
     
  • Vacation or second home
     
  • Vehicles

Add cash/cash equivalents, investments, and real/personal property. The sum represents your total assets.

Liabilities
Secured liabilities
Determine the amount of your secured liabilities, including:

  • Automobile loan(s)
     
  • Home equity loan
     
  • Margin loans
     
  • Mortgage
     
  • Rental real estate mortgage
     
  • Second mortgage
     
  • Vacation/second home mortgage

Unsecured Labilities
Determine the amount of your unsecured liabilities, including:

  • Credit card debt
     
  • Medical bills
     
  • Personal loans
     
  • Student loans
     
  • Taxes due
     
  • Other debt and outstanding bills

Add secured liabilities and unsecured liabilities. The sum represents your total liabilities. Total assets – total liabilities. Subtract your total liabilities from your total assets. The difference is your net worth.


The Complete Guide To Calculating Your Net Worth: What Your Net Worth Means
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