Learning how to calculate net worth if a fairly simple process and learning your net worth is an easy way to gauge your financial progress. Getting together all the information needed to calculate it might be a bit harder. I am going to walk you through some tools and resources you can use to make it easier.
First off, if you want to figure out how to calculate your net worth you need to read our guide on simple net worth calculation. You can also look at an example of a personal net worth statement so you can see what it would look like when you are done.
| Wealth Steps Guide to Calculating Your Net Worth |
Just to summarize: Net Worth = Assets – Liabilities
Assets: Things that you own that have monetary value to them and preferably whose value stays the same or goes up over time. This means any cash you own in savings, checking, CD’s, under the mattress, etc. Also consider the value of real estate, stocks, bonds, mutual funds, retirement accounts, money owed to you and even Aunt May’s silver tea set if you think it’s worth something.
Liabilities: These are basically debts, any money that you owe. Include mortgages, car loans, student debt, of course credit card debt and anything else that you owe on. Do not include monthly bills like water, electricity and gas.
The hard part is finding all the most recent statements for all of the above so that you know fairly accurately what the right numbers are. For example, you want your most recent mortgage statement so you know exactly how much you owe on your mortgage. Same thing for your bank accounts, your car loan, etc.
Now, Calculate Net Worth:
Once you have gathered and added up all of your assets and then done the same for your liabilities, take the total of the assets and subtract the total of the liabilities and voila…your net worth.
Now if you need some help with adding this up and also you want to see how your net worth compares with the rest of the USA you can go to this net worth calculator and you will see where your net worth is in comparison to others. I have used it and it gave me this little comparison:
Another neat tool if you want to keep track of your net worth over time is called Networth IQ. This site also helps you to calculate net worth but then you can compare it in detail to others people net worth and track it over time. This can be motivating for some, especially if you are focusing on getting out of debt and/or increasing your net worth.
In my opinion the best net worth calculator is a simple spreadsheet with assets on one column, liabilities in another and then just add it all up. That way you keep it in your computer and track it over time.
Once you have gone through the motions to calculate net worth you will find it easier the next time. If both you and your spouse go through this exercise together it can be very empowering and very helpful to both of you in achieving your financial goals and building your wealth.