Make a plan to pay down debt with solid, measurable goals. Want to grow your net worth? Crush that liabilities column. But embrace the things that truly make you happy while questioning the line items in your budget that are there because you think they are supposed to be. I guarantee you’ll see an impact on your budget.įor entertainment and fun expenses, don’t cut to the bone. Focus on just that category for a month and learn to reduce food waste. You have to eat, but even if you prefer organic, local produce and meat, you don’t have to spend $1,000 a month. Food is an excellent example of this for many families. And it compounds every month you keep your spending lower.įor required expenses, like home and insurance, do some price comparison to discover if you can lower your cost.īut take a hard look at expenses that feel required, but really aren’t. The more money you can save each month, the more that asset column grows. Review your budget and look for places where you can cut your spending. If you want to grow your net worth (who doesn’t?), there are a few fundamental ways to get things moving in the right direction. Bullet journaling, something I love for my personal and business goals, can also be a fun way to keep track. However, if you aren’t opposed to logging into all of your accounts regularly, a simple spreadsheet or notebook can work well. It also has helpful charts to show our progress, and I can click to see the trajectory of one particular asset over time. All our accounts are connected and update automatically. I use a free service from Personal Capitalto keep track of Jeremiah and my net worth over time. Which means you need to calculate it regularly. The important thing is where it is going. What your net worth is today doesn’t really matter. Simple Math to Fine Your Net WorthĪre you ready for this? Subtract your total liabilities from your total assets. If you owe money somewhere, put it on the list. This isn’t like assets where the little things don’t need to be included. All other debts: Boat loans, motorcycle loans, consumer financing (buying a couch, phone, etc.).Now we have to add up all the money you owe to people. You’re officially halfway there! Calculating Your Liabilities Other assets: I don’t usually include any assets outside the items above, but if you have highly valuable artwork, jewelry, or other things you could reasonably sell you can add them here. Cars: Use the Kelley Blue Book value of your cars.Make sure not to double count investments that sit in your retirement accounts. Investments: Value of any stock, bond, or alternative investments you have.529 Plans: Even if the funds are set aside for your child’s college education, it is still yours until he or she gets there.Retirement accounts: Value of 401(k)s, 403(b)s, 457s, 401(a)s, Thrift Savings Plans, and IRAs.When we owned a home, I used to discount the Zillow estimate by 6% to represent the real estate commission and closing costs. Real estate: This includes your house and any rental properties that you own.That wad of emergency cash your husband insists on keeping in a secret place. Cash: Checking accounts, savings accounts, CDs.But let’s not get distracted by the little things. Yes, if you really needed to you could sell the pile of books and clothes in your basement. Here you want to include any asset of significant value. How Do I Calculate My Net Worth?ĭid you path fifth-grade math? Then you’ve got what it takes to find your net worth. And if you want to see if you’re succeeding, all you need to do is check the trajectory of your net worth. Especially if you can avoid high-cost liabilities or assets that decline in value. Even if the proverbial Joneses bought that BMW in cash, the quickly declining value is going to show up in their net worth.īy investing in things that increase in value over time, you’ll move towards your long-term money goals faster. Net worth also helps you track whether you’re spending your money on things that improve your long-term wealth or destroy it. Your net worth is a snapshot that shows you what you really own, and what belongs to the bank. In a world of easy credit, it isn’t hard to convince yourself you own more than you do. The money you owe, or your liabilities, including your mortgage, student loans, car loans, and credit card debt. The things you own, or your assets, include cash, cars, real estate, and investments. Your net worth is the total value of all the things you own minus the total of all the money you owe. Net Worth Is Your Most Important Financial Stat – Do You Know Yours?.How often should I calculate my net worth?.My net worth is negative – Is that even possible?.More Frequently Asked Questions About Net Worth.
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