Guiding your life’s biggest financial moments

Personal Finance

How to calculate your net worth

Kiplinger logo

Your net worth is a measure of your financial stability, and knowing your net worth gives you an idea of ​​your economic health. The way to determine your net worth is to simply add up what you own – your assets, such as your account balances and your real estate – and subtract what you owe – your debts like your mortgage and credit card debt. credit.

Creating a detailed net worth statement gives you a good idea of ​​what you can do best to move forward. It is advisable to do this once a year. Our net worth calculator will move you forward.

And just in case you need more help, here are details on how to go through the process:

Start with Cash: what you have on hand, what is in your checking accounts and what is in your savings accounts. Include all the savings bonds and certificates of deposit as well as the money you put under the mattress (that’s a bad idea, by the way.)

For Pension saving, the value of your 401 (k), IRA or other defined contribution plan will be available in your last statement or online. If you have a retirement and / or profit-sharing plan, their valuation can be tricky. A program that will provide you with retirement income is surely a great asset, but it is difficult (but by no means impossible) to estimate in current dollars the income you are expected to receive in the future. This will require a spreadsheet, knowing what your pension promises you at retirement age, and then an understanding of the concept of “present value”.

For Other investments / brokerage accounts, you can tap into your most recent statements for stocks, bonds, mutual funds and other negotiable instruments.

A business that you own can be a potentially large asset, but it can be illiquid or have significant debt. In addition, you will know better how to assess it based on your personal situation.

Have you got Life insurance Where Annuities as investments? Your premium payments on a whole life insurance policy increase your equity by increasing the cash value of the policy (the amount you would get if you cashed it out). Your insurance agent or a chart in the policy can tell you the current cash value. Ditto for the cash surrender value of all annuities you own.

Your Principal residence is likely to be your greatest asset, so it’s especially important that you value it accurately. Don’t list what it cost you or make a crazy estimate of its current value. You can use Zillow’s or Redfin’s calculators to get a rough estimate of what your home would sell for (remember to average the results, which can vary). But still, check around to see what similar homes in your area are selling for, or ask a real estate agent for an estimate of your current market value. The same goes for a rental or vacation property that you might own.

While promoting other tangible elements Goods can be difficult, the cars are quite simple. Consult a car price guide, such as Kelley Blue Book or Edmunds.com or CarGurus. Their results will vary, so take the average. For help with valuing a boat, motorcycle, or other vehicle, start with Nada Guides. Kelly Blue Book also has values ​​for motorcycles and personal watercraft, but not for other boats. The more unusual it is, the more research you will need to do. If you own a rare or classic automobile (or other vehicle), you will likely have specialist insurance for it, which should guide you through the appraisal.

Approximate numbers will do for the value of Home furnishings, Appliances and other personal effects. It is best to be careful in your estimates. One way to do this is to guess that what’s inside your house is worth around 20-30% of the value of the house itself. Or make your own item-by-item estimate, then reduce it by 50%. Use the estimated market value (not the purchase price) of Antiques, Jewelry, and Collections. InsureU offers a practical checklist to help you track your home inventory. Your home insurer may also offer similar tools on their website or mobile app.

You can also try exploring the value of some of your most expensive and valuable possessions by researching eBay for similar items and noting the prices they sold for. It’s different, of course, from asking prices, which don’t necessarily reflect value.

WorthPoint is a subscription service that provides values ​​for antiques, art, and collectibles. It offers a free trial period. You can also use a Google reverse image search service like CamFind to search online for sales information of similar items.

Filling out this part of the form can be painful, but it shouldn’t be difficult. Most debt is obvious, and the person you owe is probably reminded of the debt on a regular basis.

Start with Invoices to pay. Then list the sum of the balances due on your Credit card. Check your most recent statement to see how much is left to pay on your Mortgage, if you have one. Speaking of houses, if you have borrowed against its value, indicate how much you have in arrears on a home equity loan. Auto loans and Student loans have their own lines, and there is an additional entry for Other loans / debts (a family member, maybe?). List all the debts you can think of because all you owe is a liability that decreases your net worth.

Your net worth will display the balance: Active minus passive.

It might not be what you want it to be. It could even be a negative number, especially if you’re young and just took out a big mortgage on a house and a big loan on a car. But don’t worry, because you’ve just taken the first step towards starting or revising a budget that can show you ways to increase your assets and reduce your debt.

You may also like...

Leave a Reply