To start things off simple, I’ll give you the problem to solve to figure out your net worth. Assets – Liabilities = Net Worth I’ve shared our investment portfolios before, but that’s really only half the story. Net worth is important to monitor because it gives us a metric we can use over time to […]
To start things off simple, I’ll give you the problem to solve to figure out your net worth.
Assets – Liabilities = Net Worth
I’ve shared our investment portfolios before, but that’s really only half the story. Net worth is important to monitor because it gives us a metric we can use over time to track our financial progress.
Sometimes when we’re paying down our high-interest debt it can seem like nothing is happening, but your net worth is actually increasing! Seeing that number go up can be very motivational to continue on your journey to financial freedom.
Knowing your net worth gives that adulting feeling and knowing you’re working intentionally towards improving it will give you that extra edge to continue to work to achieve your financial goals.
There are several ways you can track your net worth: write it all out, put it in a spreadsheet, or use an app. I like using the app Personal Capital because you can also do retirement planning and see fees on investments that are inside your accounts. Use this link to join!
Think about everything you could sell if you had to: bank accounts, investment accounts, your home, car, and any collectibles with a real market value. When thinking about your home and car, make sure to list their current value and NOT what you paid for it.
Next list your liabilities – credit cards, student loans, car loans, home loans, or any other debt you may currently hold.
Subtract these numbers and find your net worth! Keep running the numbers and watch your net worth change over time as you pay down your liability level.
We have investments but we also carry some debt: our home, our car, and my student loans. If you’d like to see where my investment journey started, you can check it out here! It has massively changed, so let’s dive into where we are now.
When we look at assets, we currently hold our investment account at about $700k, our home at $556k, and our car at $25k. We combine these to get a total asset level of around 1.28 million.
When we look at our liabilities, we currently hold our house at $497k, our car at $12k, and my student loans at $27k. This gives us a total liability level of about $536k.
Now to find the total, we subtract our liabilities from our assets to get a total of about $740k. All the debt we carry has rates under 3% so we feel comfortable investing, but we could pay it all off if we wanted and have about $200k left over. I prefer having those investments available so if we want to take some money to invest in the business, a rental home, home improvements, or something similar we can, and our money isn’t all tied up in our home.
Calculate your net worth and use it as an inspirational tool! Keep it updated to watch your progress in your financial journey.