Calculating Net Worth is Easy!

Calculating net worth is nothing more than taking a "snapshot" of your current financial "picture".

It takes everything you own (you know like your house, your cars, your stocks, and any other assets you might have)....

....and compares their value to all the debts you have (like your mortgage, your car payments, credit card bills, etc.).

This will tell you exactly where you stand, (wealthy or poor) at any given point in time.

Here's the simple formula....

Here's what a Net Worth Worksheet looks like...Net Worth Worksheet

So... all you do here is write everything you own and it's value on the left side of the sheet.

On the right side of the sheet you list all your debts.

Then, put the total amount of assets in it's box at the top of the page. Do the same for debts (liabilities).

Finally, subtract your liabilities (debts) from your assets and this is your net worth number.

You can print the sheet listed above to fill out by hand, or you can download and Excel version by following the link at the bottom of this page.

Let's say you go and pay $45,000 for a shiny, black, new Hummer.

You feel great as you drive that new rig off the lot.

6 months later, the excitement wears off and the burden of the $600 payment sets it. You decide to sell it.

You list the Hummer and within a week you get multiple offers on the car. Unfortunately all the offers came in at around $30,000.

You still owe $40,000 to the bank for the loan you got to buy the Hummer.

If you take what the asset is worth, (it's only worth what you can sell it for) $30,000, and subtract what you owe the bank, $10,000, you discover that your net worth in the vehicle is a negative $10,000.

You now realize that buying that vehicle was a poor choice in relation to your overall financial picture.

Calculating net worth just taught you to avoid buying things that will be worth less than you paid for them.

A healthy net worth is a great indicator of a financially stable person.

1. This type of person is able to provide for their own needs
2. This person is also in a position to help those that are in need of assistance

Why is net worth calculation so important?

After you learn what this number means, and then learn to calculate your net worth regularly, you are placing yourself in a position of financial self-awareness.

This simply means that instead of having no clue where you're at financially, you now know exactly where you stand.

Doing a net worth calculation on a monthly basis, you can than track your progress.

This will allow you to see if your choices are adding to or taking away from your overall financial health.

Knowing how your day-to-day choices are affecting your financial well being will lead you to make the best choices.

Click Here for Net Worth Worksheet (Excel)