Net worth is a simple formula that provides a snapshot of your current financial position. It is calculated by subtracting your total liabilities from your total assets. Keeping track of your Net Worth can be helpful to see your financial progress as you pay off debt and increase your savings and investments.
When tallying up your assets, make note of the following:
Cash
Checking Accounts
Savings Accounts
Business Accounts
Retirement Accounts (e.g., IRA, 401k, etc.)
Brokerage/Investment Accounts
Real Estate & Property (e.g., value of home, car, etc.)
When tallying up your liabilities, make note of the following:
Mortgage loan(s)
Car loan(s)
Personal loan(s)
Credit card debt
Student debt
Once you’ve found the value of your total assets and total liabilities, simply subtract liabilities from assets to find your Net Worth. You can then use this number to set monthly and yearly goals for yourself which will help you see your financial progress and keep you motivated to continue.
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