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

To calculate your net worth, subtract your debts from your assets. If you have more assets than debts, you have a positive net worth. Conversely, if you have more debts than assets, you have a negative net worth.

Even if you plan on using one of the many online tools or apps to calculate your net worth, it’s a good idea to do it yourself at least once – you’ll get the most out of the numbers that way. While you can use pencil, paper and a calculator, a spreadsheet program like Microsoft Excel can do the math for you and reduce the chance of any math errors.

A sample net-worth worksheet is shown below. Keep in mind, you can set this up in Excel and use formulas to make the calculations for you.

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

Figure 2  Sample net-worth worksheet.

Organization

Having organized records is extremely helpful and will help speed up the net worth calculation. For example, if all your important financial statements are kept in one file cabinet (or file on your computer), you’ll be able to find the necessary information quickly. If your records aren’t organized yet, now is a great time to start.

While you’re at it, create a "Net Worth" file (again, in your file cabinet or on your computer) where you can keep all your net worth statements for comparison. 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 multi-step process. Before you start, decide if you want to calculate net worth individually (you) or jointly (you and your spouse/partner). Also, get all your financial statements (such as bank statements and credit card statements) in one place.

The first time you calculate your net worth will probably 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 you have in cash and cash equivalents, 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)
  • 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’s permanently attached to it, such as a house. Personal property is everything else. Include:

  • Boats
  • Collectibles – antiques, art, coins, etc.
  • Household furnishings
  • Home technology
  • 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.

Debts

Secured debts

Determine the amount you owe in secured debts, including:

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

Unsecured Debts

Determine the amount you owe in unsecured debts, including:

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

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

Net Worth = Total Assets - Total Debts


Calculating Your Net Worth: What Your Net Worth Means
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