So, what exactly is a Net Worth? I consider our Net Worth as a snapshot of our financial standing. It shows our assets (stuff we own/have) minus our liabilities (money we owe).
Investor Words says:
For an individual, the value of a person’s assets, including cash, minus all liabilities. The amount by which the individual’s assets exceed their liabilities is considered the net worth of that person.
The amount by which assets exceed liabilities. This term can be applied to companies and individuals.
How to find out your Net Worth:
1) List all of your assets and the most current values you can find. Best to be honest here if you really want to know the truth.
*Some examples of assets are: houses, property, vehicles, checking accounts, savings accounts
, CDs, cash, Pirate’s Gold
, personal items with larger values (jewelry/high-end items/collections/pretty much stuff you could sell if you wanted or had to), annuities, stocks and stock funds, Roth IRAs, traditional IRAs, SEP IRAs, bonds and bond funds, money market funds, cash value of life insurance etc.
2) List all of your liabilities and the most current values you can find. It might suck finding out how bad some things are, but it’s better that you know.
*Some examples of liabilities are: credit cards, student loans, mortgages, home equity loans, debt
, car loans, other loans, un-paid medical bills, etc.
3) Add up the total of your assets
4) Add up the total of your liabilities
5) Minus your total liabilities from your total assets
6) There it is, yep, that’s your Net Worth.
You can update your Net Worth as often as you like, but once a month seems pretty good to me. I would recommend doing it at least once a year though.
So, what’s your Net Worth?