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How to Calculate Your Net Worth?

Net worth is simply the accounting of the total assets minus the total liabilities of a person. Tracking one's finances is not that an easy job, but there are simple ways on how to calculate your net worth. This will show the household financial improvements during the years to come. How to calculate your net worth will involve all the assets like houses owned, vehicles owned, boats if applicable, bank and checking accounts, stocks, mutual funds, jewelry, antiques and any type of collection including money that's in one's pocket. Make sure that the total monetary price for each item is applicable in current dollars.

Arranging assets according to size organizes one on how to calculate your net worth. An example would be grouping houses, land and aquatic vehicles. Next would be the liquid assets like the checking accounts, stock, bank accounts and personal cash in our wallets. Then there would be the personal assets like furniture and appliances, jewelry and antiques. Organizing them would not be a pain in the neck in tracing one's assets. Calculating one's assets is needed just in case if one gets into financial trouble. These assets can be liquidated for emergency use and is important on how to calculate your net worth.

Next step would be calculating liabilities that you have at present. Examples are outstanding debts, mortgages, credit card debts, car loans, personal loans and taxes that add up to one's liabilities and is included on how to calculate your net worth. List all assets and liabilities on a balance sheet in order to organize data collected. Gather the needed documents such as statements and receipts of the day this will also add to the day's expense. It is appropriate to trace whether a person is spending more than what he is earning. This is a useful strategy in tracing one's financial development and achieving one's financial goal and on how to calculate your net worth.

The last step would be on how to calculate your net worth. Just subtract the total value of liabilities against the total value of the assets and we get our personal net worth. Having a negative or a positive value, whether it is big or small in total does not matter. Negative values shows negatives net worth, however, numbers showing positive values is a good sign that finances are being control accordingly. Not to worry for this is only the beginning on how to manage one's finances properly. Make this a basis for future how to calculate your net worth calculations.

Repeat these steps annually and compare it against last year's net worth. One may calculate one's financial status regularly on how to calculate your net worth in order to view a bigger picture of one's personal finance. This may determine if one is making financial progress. Always keep financial statements for this will show the exact liability one has every month. When dealing with house and auto estimates, it must remain conservative. This is how to calculate your net worth during the whole process in tracking financial progress.

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