Your own personal net worth is something that can serve as a truly useful tool in measuring the financial progress that you have made from one year to the next. What your net worth is, is essentially just a grand total of all of your assets, with liabilities subtracted. There is no magical number when it comes to net worth because everyone is different. Just make sure that you are using your own personal net worth in order to track your financial progress from one year to the next, and hopefully you will see some improvements in the process.
Calculating your own personal net worth is not difficult at all, and it only really requires a little bit of financial information regarding what you own, how much money you have and how much debt you owe.
Step #1 - You should begin this process by listing out all of your largest assets, such as your home and any vehicles that you may owe. Make sure that you are using accurate estimates in the current amount of dollars.
Step #2 - Next what you are going to want to do is to gather all of your latest financial statements for the assets that you have that are more liquid in nature. This is going to include your checking accounts, savings accounts, cash, investments, CDs and retirement accounts for example.
Step #3 - Third, what you are going to want to do is to consider listing any personal items that you have, that have some kind of value to them, such as jewelry, collections, musical instruments and so on and so forth. You do not have to itemize absolutely everything that you own, but you should definitely be listing any items worth more than $500.00.
Step #4 - Now what you are going to want to do is add all of your assets together from the first three steps, creating your "total assets".
Step #5 - Now you want to look at your liabilities. Again, you should be beginning with the major outstanding liabilities, including the balance on your loans or your mortgage.
Step #6 - Now, you should list other personal liabilities such as student loans, credit cards and any debt that you have to pay off.
Step #7 - Add up all of your liabilities, coming to a "total liabilities" number.
Step #8 - Now what you should do is to subtract the total liabilities from your total assets in order to come up with your net worth number. It does not matter what your net worth is, it just matters that you work on improving it from this point on. Repeat this process every year, comparing the new number with last year's number to find out if you are moving in the right direction or not financially.
Photo Credits: Kevin H.
Originally posted 2009-09-17 03:23:34. Republished by Blog Post Promoter
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