Assessing your net worth
Reviewing your net worth annually can help you achieve your financial goals.
Completing a net worth statement is an easy way to assess your current assets and liabilities. The process is easy, gives you a snapshot of your current financial situation and provides information for next steps. It is recommended that a net worth statement be completed annually and it is an important part of your overall household record keeping.
You can find templates for net worth statements at county Cooperative Extension Service offices, financial institutions, at USA.gov or you can make your own. The main goal is to list your assets on one side and add them up and then list your liabilities (debt obligations) on the other side, and add them up. To get the most accurate snapshot, be sure to include “everything” in either category:
- Asset examples could include: cash, checking and savings accounts, life insurance - cash value, household furnishings, personal property, home, real estate, retirement plans, money owed to you, etc.
- Liabilities could include: Mortgage balance, credit cards, taxes owed, loans (i.e. bank, car or student), charge accounts owed, insurance premiums due, etc.
Completing the net worth statement takes about one hour. Once you have completed each list then subtract your total debts from your total assets. If your assets are larger than your liabilities, than you have a “positive” net worth. If your liabilities are larger than your assets, than you have a “negative” net worth.
Net worth statements provide a variety of information. When completed on an annual basis, they can help families monitor their accumulation of possessions, help them gauge if they are getting ahead financially or falling behind, and how fast they are moving in either of these directions. Try not to become discouraged if your net worth statement is not what you expected. This important information will help you decide if your current spending choices and budget are helping you achieve your financial goals, and if not, then you can decide to make changes. For a variety of financial tips, including how to develop a monthly budget, visit MIMoneyHealth.org.
Also, Michigan State University Extension is offering the free program, “Top 50 Tips: Be a Money SMARTY!” on Tuesday, April 8. The program will begin at 6 p.m. and is a part of Money Smart Week. To sign up for this program or to find other programs in southeast Michigan, just visit www.moneysmartweek.org. Money Smart Week events are open to the public and cover topics including kids and money, unemployment, managing student debt, retirement and more.