You’ve probably given some good thought to your credit score, but what about your net worth? The net worth seems like something only fancy rich people think about, but there’s a good reason why you should be paying attention to yours too. This is actually super simple to figure out and a great way to get a snapshot of your overall financial health. To calculate your net worth, you subtract what you owe from what you own. Read on to learn more about how to calculate your net worth, and why you should!
Calculating your net worth is easy peasy, but if you’re wanting a tool to help you get everything down in one place, I’ve created a spreadsheet for you! Enter your email below to receive the Net Worth Calculator and sign up for more money and personal growth tips delivered to your inbox.
You’ve probably given some good thought to your credit score, but what about your net worth? The net worth seems like something only fancy rich people think about, but there’s a good reason why you should be paying attention to yours too. This is actually super simple to figure out and a great way to get a snapshot of your overall financial health. To calculate your net worth, you subtract what you owe from what you own. Read on to learn more about how to calculate your net worth, and why you should!
Calculating your net worth is easy peasy, but if you’re wanting a tool to help you get everything down in one place, I’ve created a spreadsheet for you! Enter your email below to receive the Net Worth Calculator and sign up for more money and personal growth tips delivered to your inbox.
First things first
Your net worth does not equal your self worth!Click To Tweet
I feel like that’s a really important point to get across. How much money you have or whether or not you’re in debt does not dictate your value as a person. You are so much more than that number. Even so, calculating your net worth can help you get an idea of where you’re at financially and whether you’re going in the direction. Use it as the tool it is and don’t let it become a statement on who you are.
Why should you calculate your net worth?
If you’re anything like me, you reeeeeallly need to know why you should do something before you do it. Don’t worry, I’ve got your back. You should calculate your net worth for several reasons.
First of all, it gives you a measure of your true overall financial health. Maybe you’re one of those lucky ones who’s bringing in six figures shortly after college and you feel like you’re doing GREAT. Calculating your net worth might help you realize that even though you’re bringing in a decent amount of money each month, you’re spending most of it and you still have $50k in student loans, plus a $20k car loan for that shiny new car you just bought. Nothing to panic over, but it IS information that you should have so you can adjust accordingly.
Chances are, that’s not your scenario. Maybe you’re a teacher who’s only bringing in $30k a year. BUT you started contributing to your retirement right away and don’t have student loans or a big car loan. Your net worth might not actually be as bad as you thought.
But wherever your net worth is, the real value in calculating it is so that you can track your progress financially. You might end up draining your savings account specifically earmarked for a house on your down payment, but now you have equity in a house. Your savings accounts will fluctuate, but you want your net worth to steadily rise upward month after month. If there’s a downward trend, you’ll know you need to readjust some things.
How to Calculate Your Net Worth
This is easy peasy, seriously. It might take some time to round up all the information, but it’s as easy as putting it into two different columns and subtracting one column from the other.
Step 1 – List all your assets
What counts as an asset, you ask? Different experts will have varying answers, but an easy way to think of it is what could give you actual cash value in a pinch. Assets can include
- cash
- savings accounts
- investments
- vehicles
- jewelry
- art
- property
- your home
The key to listing your assets in the most realistic way is to make sure that you list what you could sell your assets for, not what you actually paid. Used engagement rings don’t sell for much, and cars depreciate a lot over time. Furniture is never worth as much as people think it will be. In order to have the most accurate picture of your financial health, do some *quick* research to see what your stuff is actually worth.
Step 2 – List all your debts
This isn’t as fun as listing all your assets, but still a necessary part of the equation. List everything from credit card debt to student loans. If you have a mortgage, list what you have left to pay too. Total it all up and you have the grand total of all your liabilities.
Step 3 – Subtract your debts from your assets
Now that you have a dollar amount for all your assets and all your debts, you can tally up what your net worth is.
net worth = assets – liabilities
And there you have it! You’ve just figured out your net worth.
Net worth at a glance
If you’re looking for a quick way to keep track of your net worth, you can do so with all of the following budgeting websites.
- Mint.com
- Personal Capital
- You Need A Budget
- Google Sheets
The only downside in using these different websites to calculate your net worth is that it doesn’t account for things that you can sell, such as jewelry. Other than that, they’re a quick and easy way to figure out your overall net worth and make sure that you’re going in the right direction financially.
How often should you check your net worth?
This depends on your personal preference, but checking your net worth once a month is usually a good goal to shoot for. The main aim in checking your net worth is to make sure that you’re headed in the right direction. If your net worth is steadily decreasing, or even just staying stagnant, you’ll know that you’ll need to make some adjustments. This can only be done if you are checking it daily.
Mindset Check
Your net worth does not equal your self worth! It’s so easy to get our identities all wrapped up in how much money we have, isn’t it? While money is important, it’s not the end-all, be-all of our lives. If you calculate your net worth and you’re feeling really down on yourself, take a moment to reflect on why you might be feeling that way and how you can change your thought patterns to be more constructive. Believing in your ability to grow in your finances is half the battle. It feels hard now, but just put one step in front of the other and eventually you’ll see your net worth growing each month. You’ve totally got this!
I’ve been checking my net worth on a monthly basis for quite some time now, and it’s exciting to see the progress that I make over time. Be sure to check out the net worth calculator. You can drop your email below for all the deets.
