What are you worth? How to calculate your net worth
A net worth statement can help plan for future financial decisions.
Do you know how to determine your financial net worth? You may actually have more financial worth than you thought!
A net worth statement is a calculation of how much you are worth financially at a certain point in time. A net worth statement is a way to keep tabs on your families’ possessions. Experts suggest preparing a net worth statement every year.
To calculate your net worth the first time, it’s helpful to use a prepared worksheet. It will help to you to learn what assets and liabilities make up a financial net worth. You may have already calculated your net worth when you filled out an application for a mortgage or auto loan.
The first step is to calculate the value of your assets. This includes the value of your home, cash value of whole life insurance policies, savings accounts, United States Savings Bonds, annuity values, car values, value of household furnishings and appliances, value of collections, jewelry, gun collections, furs, etc. If you own mutual funds, stocks, or bonds, determine the value. This can often be found of the website of the brokerage firm on your personal account. Total the value of your assets.
The next step is to determine your liabilities or debts. This includes balances owed on loans, credit cards, principal balance on a mortgage or real estate loans including second mortgages or home equity loans. Add the sum of the balances.
Subtract the value of your liabilities from the value of your assets. This is your net worth. Remember this is just a snap shot in time. Preparing a net worth statement each year will give you a picture of how you are faring financially from year to year.
Michigan State University Extension assists individual, households and organizations through personal financial workshops and programs related to financial capability. For more information, go to MI Money Health.