Compute Your Net Worth

Computing your net worth is something that everyone should be able to do. You do not need to hire an accountant to figure out your net worth. It just takes a few minutes and some organization. If you calculate your net worth on a regular basis, like annually or every six months, you will have a pretty accurate measurement of your financial health and whether your finances are getting better or worse.

Basically, your net worth is just a measurement of how much equity you have. If you take the value of all your assets and subtract the balance of all your liabilities or debts, the amount that is left is your net worth. This number can also be a negative number meaning that your debt is greater than your assets. While calculating your net worth at any giving point is helpful, it is more important to track your net worth over time.

Assets include anything of value that you own, such as your car and your home. Assets also include all your liquid assets such as the balance in your saving and checking accounts and any stocks or bonds that you may own. You also need to add in the balance of any life insurance policies, real estate value and any other assets that you could sell for cash. Liabilities include all the money that you owe, including any vehicle loans or mortgage, credit card debt, student loans and any other financial obligations that you are responsible for paying back.

Once you pull all the information that you need to calculate your net worth, the actual calculations are very simple and basic. Calculating your net worth on a regular basis is an important step in taking responsibility for your own financial health.