Your Net Worth and How to Find It

August 11, 2008 · Posted in Personal Finance 


What is net worth? Basically your net worth is a grand total of your assets minus your liabilities. Your net worth is by far the best way to measure you financial progress from one year to the next. To find your net worth we’ll start by looking at your assets. These are the things you own, or partially own. Start by making a list of all your larger, more obvious assets, for example, automobile(s) if you own them or part of them, your home or homes, and land.

A liquid asset is more like non-tangible assets. To find this gather your bank statements like checking and savings accounts, retirement accounts, and CDs that you have and also cash on hand. Now lets take a look at personal belongings and valuables. Experts say that a good minimum for listing these items is around $500. This would include jewelry, art, major collections, antiques, a piano, etc. Also you may want to consider cattle or farm equipment if you didn’t already. Boats, trailers, and farm machines should all be considered. All of these items so far should be added together to total your overall assets.

Now to the not so rewarding part: liabilities. Once again lets start with the major liabilities like a mortgage on your home or land. Automobiles that may not be fully paid for yet are also liabilities. Now tally up smaller liabilities. These would be personal loans from your local bank, credit cards, what is left on your school loan, and any other personal debt that you may have. Again, $500 seems to be the magic number, so if you own your neighbor a twenty leave that off.

To find the total net worth subtract all of your liabilities from you assets and there you have it: your net worth. Do not be discouraged by this number. It could be high, low, and in many cases, negative! Do not let that get you down. This number can be used for many years to come to measure your financial progress.

Small things like home improvements can dramatically change your net worth. By making some minor improvements to your home you can increase its value, which applies to your assets. Refinance debt to get a lower interest rate and always pay more than the minimum amount due to make changes to your liabilities.

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