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Young African man writing on a piece of paper with an open laptop calculating personal net worth

Do you know what your personal net worth is at the moment? Here’s another question: how often do you calculate your net worth? 

 

Now that the last quarter of the year is here and the new year is around the corner, it’s a good time as any to take stock of your finances. 

 

Many of us rarely take the time to do a detailed calculation of our net worth, me included. Instead, we operate under the notion that we know what we own by memory. As a result, the chances of getting some figures wrong or leaving something out are very high.  

 

In the business world, especially where the company has physical stock, stocktaking is a must activity at the end of the year. It helps a business account for how much stock and inventory it has, from quantity to condition of its stocks. 

 

When it comes to our finances, we should have the same. Set aside a day to take stock of our financial health and assess our net worth. 

 

Black board showing Personal Net Worth writing with a piggy bank and carry bag with $ sign next to it

 

What Is Your Personal Net Worth?

Your net worth is how much you own (assets) less your liabilities. It is important always to know your net worth because:

 

  1. It gives you a better understanding of your financial health
  2. You get a reference point for measuring your financial progress on specific financial goals 

 

While it is important to calculate your net worth regularly, you can do it at least twice or once a year. This way, you can always account for any changes that might have happened in your life within this period. 

How To Calculate Your Personal Networth

Unlike businesses that have complicated and detailed financials, calculating your personal net worth is pretty straightforward. And with my budgeting planners, you do not have to struggle through the process! Check out the available options from the above links and get your planner! 

 

Now, let’s get to calculating your net worth!

 

What Are Your Assets 

Start by taking stock of all your starts (this is what you own). It includes:

 

  • Cash in the bank
  • Cash at hand
  • Money in savings accounts – Sacco, Money Market Funds, fixed accounts, etc
  • Investments (current market value) – stocks, bonds, pensions, annuities, life insurance cash value, mutual funds, etc. 
  • Real assets – house, land, jewelry, cars, household furniture, home technology, etc

 

Once you have a list of all your assets, add them up. That’s the value of what you own. I’d recommend having this in a sheet you can refer to regularly and for easier updates. 

 

What Are Your Liabilities

Liabilities are anything that you owe to others, both secured and unsecured. These could include: 

 

  1. Car loan
  2. Personal loans – including debts from digital lenders 
  3. Student loans
  4. Credit card balances 
  5. Mortgage
  6. Outstanding bills 

 

As you did with the assets, sum everything up to get how much you have in debt. 

 

Assets Less Liabilities = Net Worth

Have you listed all your assets and liabilities? Great! The next step is to subtract your liabilities from your assets. 

 

So, what you get is your net worth, and what does it mean?

 

the-stress-is-not-worth-the-paycheck-

 

Negative Net Worth

If your personal net worth is negative, it means you have more debts than what you own. Let’s say you had assets of $200,000, but your total liabilities came up to $350,000; your net worth will be -150,000 ($200,000 – $350,000). 

 

It is important to keep in mind that having a negative personal net worth is not always bad. For some, depending on the stage in life, you will have a negative net worth. For example, if you are a student and just started looking for employment or started a new job, there is a likelihood you have a negative net worth. However, it is not bad, since your student loan is more of an investment into your education to help you get a job. 

 

The goal is to manage your liabilities to ensure they don’t spiral out of control, even if you are not a recent college graduate. 

 

Positive Net Worth

A positive personal net worth is a great sign. It means you have more than you owe. Take our previous example; if your assets are $350,000 and liabilities are $200,000, it means you have a personal net worth of $150,000.

 

Whatever your personal net worth, the goal is to have a Financial Success Road Map that will help you improve your situation and work towards meeting your financial success. Use this worksheet to calculate your net worth quickly.

DISCLOSURE: THE INFORMATION PROVIDED TO MY READERS IS GENUINE AND PRECISE TO THE BEST OF MY KNOWLEDGE. THE LINKS PROVIDED IN THIS ARTICLE DO NOT BELONG TO ANY AFFILIATE PARTNERS AND I AM NOT PAID FOR THEM. THE ARTICLE OFFERS GENERAL INFORMATION AND SHOULD NOT BE USED AS A SUBSTITUTE FOR PROFESSIONAL ADVICE OR HELP THAT CATERS TO YOUR INDIVIDUAL FINANCIAL GOALS. KINDLY SEEK HELP AND ADVICE FROM YOUR FINANCIAL ADVISOR FOR PERSONALISED ADVICE AND HELP. ANY ACTION TAKEN BASED ON THIS INFORMATION IS AT YOUR OWN RESPONSIBILITY AND RISK. 

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