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Calculating Your Net Worth
| The last element of effectively managing your money involves calculating your net worth and working to help it grow in the future.
Your net worth is a measure of your financial well-being, or your wealth. The higher your net worth, the better off you are financially. Ideally, if you manage your finances responsibly, your net worth will grow over time.
| Click here for your Calculating Your Net Worth Worksheet
| To calculate your net worth, simply subtract the value of your debt from the market value of your significant assets.
| - Market value is what something is worth today, or what you could currently sell the asset for in the appropriate marketplace.
| - Your significant assets include cash and other assets like stocks, bonds, mutual funds, real estate, retirement account, a business, automobiles, fine art and antiques, and so on. Significant assets do not include your clothing, furniture, household goods, etc.
| When you subtract the total value of your debt from the total value of your significant assets-the resulting number is your net worth.
For example, if your assets total $50,000 and the total value of your debt is $30,000 -your net worth would be $20,000.
Don't be alarmed if you have a negative net worth. Although a negative net worth is not a sign of financial health, the important thing to remember that your net worth can constantly be changing. What your goal should be is to get your net worth moving in the correct direction. This can only be done by eliminating your debts and increasing your savings. While there is no easy or quick way to accomplish this goal, this briefing is your first step. Checking your net worth on a regular basis is like looking at the gas gauge in your car; you can't get where you want to go with an empty tank.
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