How to Compute Your Net Worth

Start by listing all your assets and recording the current value of each. Be sure to include the current value of any personal bank accounts, (money market, CDs, savings, checking). Then list any investments such as bonds, mutual funds, stocks, and certificates of deposits. Add any retirement accounts, profit sharing plans and pension plans. The cash value of any life insurance (non-term) policies comes next.

Now list any real estate you own. Be conservative on valuing this, check with your taxing jurisdiction to see what valuation percentage they apply to your property for tax purposes. Some locations assess at 100% of market value, some assess at a lesser percentage of market value and make up for that with a higher tax rate. Usually the assessment date is January 1, but check to be sure. Whatever that date is, it may be a good date to measure your net worth every year.

Be sure to list any cars, trucks, boats and other large value items you own, such as jewelry, coin collections or the like, as long as the value of each item is significant, say $500 or more.

Now start a second listing that includes your liabilities. Again, the largest item may be a mortgage on your real estate holdings. Include in this list any loans or debts such as student loans, car or boat loans, and credit and charge card balances. Be sure to include any and all debts owed to anyone.

Add up all your assets and then add up all your liabilities. Subtract your liabilities from your assets. The result is your net worth. Now you have a tool to use in financial planning for your future.