Developing a Financial Plan: Assess Your Net Worth
As the new year inches ever so closer, it's a good time to take an overall look at your financial situation. A good way to know this is to establish your net worth. You need to know the sum total of what you owe and what you own. Many folks just aren't aware of where they are financially. To assess your total net worth you add upp all that you own (assets) and subtract what you owe (Liabilities). Below are examples of each.
Assets: current value of car(s), current value of home, furniture, savings account balances, checking account balance, life insurance policies, investment account balances, 401K balance, etc. You just find the value of everything that you own and record it. Once all is on a list, you add them all together and you have the total value of all your assets. You can do this on a spreadsheet if you wish.
Liabilities: Amount owed on: car(s), home, furniture, credit cards, installment loans, second mortgage, medical debt, etc. Just like your assets, you add the list of all your debts togther and get your total amount owed (liabilities).
Doing the Math
Total Assets - Total Liabilities = Net Worth
Go ahead and get started. You might just learn something. You might decide that you are proud of what you've accomplished financially. On the flip side, you might get motivated to make some financial changes. A new year is coming and now is a good time to see your overall picture.
Just did this, and it looks like I’ve been able to increase my net worth by about $8,500 this year! And one more paycheck will up that to just under $10,000! The great part is that that’s all since July! My only debts are student loans and doing this excercise over time is very encouraging. I can’t wait to do this in another 3 months and see how much I’ve been able to save and reduce the balance on those loans.
I am a huge fan of tracking your family’s Net Worth. How else would you know where you stand financially? Are you saving and investing enough? Tracking net worth every month helps me keep on the right course.
You’re right. It helps me because I’m not happy with all the liabilities I have. I want to get rid of them as soon as possible. Thanks for dropping by.