Do you know how to calculate your net worth or you are possibly unfamiliar with? Well, I will put you through that. Read on to understand how to calculate your net worth.
What Really is a Net Worth In a simple term what you have left after subtracting your assets from your liabilities is your net worth. In another word, the summation of all your possessions from your cash to your home value, and then deducted from your debts, namely mortgage, car or credit card.
It is even recommended by financial planners that there be a folder to keep the list of all financial assets and liabilities and must review for update each year. If you have not, then you need to get to work now.Now that you have understood what is meant by net-worth, what next is learning how to calculate your net worth. From the definition, you should have identified that the process of calculating one’s net worth is simple, but you should never escape adding all information including your liabilities and assets.
But the collections of information can be mind-boggling, hence the moment you do, ensuing addition will never be much. One more thing before we get started is, be sure that close-trusted family relatives, most importantly your wife and children have open entry to it when an information is needed.
2. Calculate Your Liabilities1. Calculate Your Assets
To make this easier, begin by listing out first your largest assets. What a business owner would see as an investment might be different from an employee. ensure that accurate evaluation of your assets in dollars.
You will be required to gather all latest statements for more liquid assets owned.
The next is listing out other high valued personal materials.
The last part is to add up all that you have listed out; that is your total asset.
Just as you did with your assets, start with the most superior liabilities.
Then the next move is to calculate all personal liabilities. This includes loans and balance on your credit card.
After listing them out, then add up all the liabilities; that is your total liabilities.
3. Deducting Your Assets From Your Liabilities
Subtract all the total assets that you get from the total liabilities. Therefore, what you have left is your net worth. What will you do if all your net worth arrives at a negative, it is telling you that you have a negative net worth, whereas, a positive net worth is a positive net worth!
The beauty of calculating you’re net worth is just to help visualize what you can compare with the future. Then, what is next expected?
Repeat the process at least once in a year. This is paramount to tell you where you have to work more. It will reveal if there are outstanding progress. There is no harm in working towards having a more positive net worth. As you do it yearly, you will keep an eye on it.