How to Calculate Net Worth

4/30/2015

Chris Parks
Senior Vice President

What is Net Worth?iStock_000052597196_Large

Net worth is the difference between what you own and what you owe.

Net worth is essentially your assets (everything you own of value) minus your liabilities (what you owe in debts). Assets can include your home, your cars, your investments, cash or anything else of value. Liabilities are debts such as car loans, mortgages, student loans and credit card debt.

Calculating your net worth is a fantastic measure of your overall financial health, as well as a way to monitor your financial progress over time.

How do I calculate my net worth?

To calculate your net worth, you will need to list out all of your assets and their value. This includes all savings and checking accounts, retirement accounts, and investment accounts, as well as your physical assets like home and cars. To make it easy, write these in a column with the value next to them, and then total up the value of all of your assets.

Then, make a separate list of your liabilities. Write down all mortgages, personal loans, credit card debt and any other debt you owe, and then total those numbers as well.

Take the number of your assets and subtract the number of your liabilities – this is your personal net worth.

How do I change my net worth?

Simply put, your net worth will increase when you make your debt numbers decrease and your asset numbers increase. Of course, this is always easier said than done, and will typically happen slowly over time.

Paying off debt is very important to increasing your net worth, especially loans or debt with high interest rates. From there, you can begin to increase your investing and savings to boost your net worth even more. This will require time and planning, but increasing your net worth will provide you with a better financial outlook and more secure future.

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