How to Calculate Your Net Worth

Do you always hear about these rich billionaires and what their net worth is but you are left wondering what this is or what your own net worth is? While there are a number software programs that can help you determine your net worth, you can still calculate this physically. But you will need to know what you are talking about first.

Defining Net Worth

So what is net worth? The short answer is that your net worth is the value of everything you own when you take out what you owe.  The net worth is determined by looking at your assets and debts. The assets include the portion of your home which you have already paid for, cars, cash in the bank or any investments you hold in the form of shares and bonds. When you calculate your net worth, you cannot include liabilities. These are what you still owe on the assets you have including the loan for your car, the mortgage for the house and any credit cards you are using.

List all your assets

To calculate your true net worth, start by making a full list of all your assets. In this list, include your cars, home, bonds you hold, stock holdings, businesses where you own shares. Many people would rather have a point where they stop including things. You may want to say you will not include anything less valuable than say your car. You must place a value on each of the assets you have listed. Once everything has been listed, it’s time to add up the numbers.

List all your debts

Now it’s time to list what you owe. In this list, include all your balances on your credit card and personal loans. Do not forget to include any student loans, the loan on your car, your furniture. Do not leave any debt, no matter how small it looks. When you add together all the small debt, you can discover that it becomes a big chunk of money. Once everything has been listed, add together and get a total.

Subtract and decide what your worth is

Once you have the two numbers, subtract your debts from your assets. The number you get is your net worth. There is no need to panic if this number comes back negative. This usually happens to young people who still haven’t earned enough money to start reducing their debt. At other times this may be an indication that you are over borrowed.   The fastest way to increase your net worth is by reducing your debt drastically while adding to your assets list.

from
http://www.peakofman.com/2017/02/13/how-to-calculate-your-net-worth/