Knowing Your Net Worth

Having a sense of what you own (your assets) and what you owe (your liabilities) is important because it provides some measure of your net worth, financial security and your ability to accomplish financial goals such as buying a home, starting a business, or retiring someday.

What Is Net Worth

Your net worth is quite simply your financial assets (for example, bank and investment accounts) minus your financial liabilities (debts such as loans and credit card debt).


When I say your monetary net worth, I’m not talking about personal possessions. Your car, stereo system, television, computer, and other personal items all have some value, of course. If you need to sell them, you could get something for them on eBay. But the reality is that you’re unlikely to accumulate personal items with the purpose of later selling them to finance such personal goals as buying a home, starting a business, retiring, and so forth. After all, these things are investments that would decline rapidly in value after purchase.

First you need to figure what you own to know your net worth

Financial Assets

To calculate your financial assets, get out your bank statements and investment account statements, including retirement accounts and any other paperwork that can help you.

You may have only one or two accounts, and that’s fine. Add up all the values of these accounts to find out what you own.

It’s perfectly normal for most folks under 30 to be just starting out in terms of accumulating assets. This article is going to help you change and improve your asset and net worth.

In addition to excluding personal property and possessions because folks don’t generally sell those to accomplish their personal and financial goals, I would also probably exclude your home as an asset if you happen to own one. You can include it if you expect to downsize or to rent in retirement and live off of some of your home’s equity.

Now, I do have one exception to something that isn’t generally thought of as a financial asset, which you may or may not want to include in this category. Some people have valuable collections of particular items, be they coins, baseball cards, or whatever. You can count such collections as assets, but remember that they’re only real assets if you’d be willing to sell them and use the proceeds toward one of your goals.

Next determine what you owe to compute your net worth.

Financial liabilities

Most people accumulate debts and loans during periods in life when their expenditures exceed their income. I did that when I went through college. You may have student loans, an auto loan, and credit card debts. Get out any statements that document your loans and debts and figure out the total of them all.

Getting the difference

After you total your financial assets and your financial liabilities, you can subtract the latter from the former to arrive at your net worth.

Most folks in their 20's have a very small or negative net worth.

There’s no point wringing your hands over the results — you can’t change history. But you can change the direction of your finances in the future and boost your net worth surprisingly fast. You have to figure your savings rate and plan how to increase it.

To help you compute your networth, please find the download link of the personal net worth calculator below:
Personal Net Worth Calculator

Tags: net worth, assets, liabilities, networth calculator