Tips & advice on getting your finances back on track.
Your net worth is at its most basic defined by, what you OWN less what you OWE, or your assets less your liabilities. It provides a snap shot of your financial picture and allows you to track it over time. It allows you to see if your net worth is growing and to focus on specific goals such as saving more in your retirement fund or paying down your debts.
Getting started may seem scary at first, especially if you have more liabilities than assets, but at least you’ll have a starting point.
How to Calculate Net Worth
The simplest way to calculate your net worth is in a spreadsheet. Start by listing your assets. These will include things like:
• Home equity
• Emergency Fund
• Real estate
• Retirement fund
• Other Cash
• Valuable Collections
Cars may be included or excluded depending on the age and value of your car. Given how fast cars depreciate in value it may not make sense to include your car if it’s an older model.
Now add up your assets. This is your Total worth, but is only part of the picture.
Now you need to list your liabilities. These will include:
• Car loan
• Student loan
• Credit card debt
Add these values up. Then subtract your liabilities from your assets. The answer is your Net Worth. Don’t be discouraged if the answer is negative, this is just your starting point.
Once you know your net worth, set some goals for yourself. You may want to decrease your mortgage, pay down your student loans, or save more in your retirement fund. Take some concrete steps toward your goals.
If you need some help setting some financial goals or creating a working budget, consider calling Navicore for a counseling session.
Now, track your net worth every 6 months and compare it against your goals. How are you doing? What extra steps can you take to reach your goals?
Tracking your net worth is a valuable tool, giving an overall picture of your ongoing financial health.
Lori Stratford is the Social Media Strategist at Navicore Solutions. She promotes the reach of Navicore’s financial education to the public through social media and blog content.
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