How much are you worth?
You are here because you want to take charge of your personal finances.
And one of the few things to do in order to have the bird eye’s view of your current personal financial situation is to determine your net worth.
Net Worth as defined by Investopedia is
the amount by which your assets exceed your liabilities
In more simple terms, it’s the difference between what you OWN and what you OWE.
Assets – What You Own
You might argue with me and tell me that your face or your body is definitely an asset.
I agree, of course!
However, these Assets that we need to determine are the ones that you own and have a definite monetary value.
To give you an idea, here are examples of what assets you might own:
- Savings accounts
- Special deposit accounts
- Checking accounts
- Certificates of deposit
- Money market accounts
- Real estate
- Mutual funds
- Retirement accounts
- Pension funds
- Cars (If they are already fully paid)
- And anything else that is valuable enough to list
Later on, I will give you templates that you can use to list these down properly and orderly.
But before that let’s get to the second part of your net worth equation, your liabilities.
Liabilities – What You Owe
Here comes the negative part of your equation, what you owe.
You should list down all debt that you owe from any company or from anyone.
Whether there is a printed statement or it’s just verbal, write it down.
Here are some examples:
- Credit card debt
- Home mortgage
- Car loans
- Bank loans
- Student loans
- Business loans
- Taxes you owe
- Personal loans
Whew! Good job!
If you made it this far, now it’s time to organize it somewhere where you can track it easily and also add or delete items with less effort.
Net Worth Statement
There are a lot of free resources in the Internet where you can download net worth worksheets.
I already googled a few of these using the keyword “free net worth worksheet“:
I personally like using an excel worksheet over using a printed version.
That way, we can save paper (and trees!) and also makes it easy to keep track and change values.
Your Net Worth
Are you done listing all of what you own (assets) and all of what you owe (liabilities) using any of the tools I’ve listed above?
Now we can determine your net worth.
Just add up all your assets and add up all your liabilities.
You have a Positive Net Worth if your total assets is greater than your total liabilities. Hooray for positive net worth!
But, you have a Negative Net Worth if your total assets is lesser than your total liabilities. Don’t worry!
So, in either case, whether you are positive or negative, you have endured and have shown yourself that you are very serious about taking charge of your personal finances.
Now you are aware how much you are worth.
However, this is just one-third of your overall personal financial status.
I strongly suggest that you also determine your cash flows and also build up your safety fund.
To our success in all areas of life,
I’m on Facebook: http://www.facebook.com/argeltiburcio
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