Have you ever wondered what your net worth is but don’t know how to calculate it? Putting it as simply as possible, your net worth is what you own (assets) – minus what you owe (liabilities).

Tracking your net worth is a great first step in planning for your financial future. When you know your current numbers, you know how far away you are from your ultimate goal, whatever it may be. If you’ve never calculated your net worth, you may be wealthier than you thought you were! You might also find you’re poorer than you thought. Whatever the case may be, it’s good to know where you stand.  

What you’ll need

You don’t need much to calculate your net worth, but there are some tools that make things easier.

To start, you’ll need something to write down all your numbers so you can add them. You could use a piece of paper or anything on your computer/smart phone that lets you enter numbers. Google Sheets (GS) is probably the best option on the computer since it’s basically a free version of Microsoft Excel. You can enter your numbers into different cells and even use the SUM function to add them all up.

how to calculate your net worth

Running the SUM function in GS.

how to calculate your net worth

You will need to know the current value of everything you own. To make things simpler when adding up all of my financial accounts, I use Personal Capital (PC). PC aggregates all of my bank, investment, mortgage, and credit card accounts so I can see everything in one place. It will even tell you what your net worth is but I don’t use this number as I have additional things in my net worth that aren’t in the app.

PC also pulls a Zillow estimate for the current value of my house, but I don’t think it’s very accurate so that’s another reason why I don’t use the net worth number it gives.

Assets

Using PC, I start calculating my net worth by putting the total amount I have in investment accounts into a Google spreadsheet. Next, I take the total amount of cash that shows in PC and add any paper cash we have, then put the true cash total into another cell in GS.

Thirdly, I take what I think we can sell our house for and subtract 10% from that number for seller fees then subtract our mortgage balance. The remainder is our home equity and I put that number in another cell.

Zillow says our house is worth $140,000, but I did some digging and think that’s a bit more than what we could actually get. A house in our neighborhood that’s similar to ours just sold for $140,00, but it has a couple of features ours doesn’t. I might be a little conservative, but I use $110,000 as our current home value. Check out Zillow to see what houses are selling for near you.

Optional assets

Some people only consider their investments, cash, and real estate to make up their net worth. I think technically anything you own that can be sold could be included in your calculations.

Here’s a list of some other things you could consider assets:

  • Cars (If they’re paid for). Check Kelly Blue Book to see what your car could sell for.
  • Any other vehicles (RVs, ATVs, campers, etc..).
  • Jewelry.
  • Household items.
  • Cash value of life insurance (if you have it).
  • A business or website you could sell.

And anything else you can think of that you could sell. Even include scrap metal if you want. It’s up to you to decide what you want to consider as part of your net worth.

Liabilities

Liabilities are anything that you owe money on. As I stated with our house, I have to subtract the money that we still owe on our mortgage from our net worth because we are required to pay it. If you owe anyone or any company money for anything, you need to subtract it from your net worth. Common liabilities are mortgages, student loans, and car loans.

You can add up your liabilities like we did with our assets to get the total amount. Once you know the total amount of your assets and liabilities, all you have to do is subtract the liabilities from the assets and that is your net worth. Simple enough right?

What part of my net worth should I focus on growing?

Now that you know what everything you own is worth, you can do an analysis on how your net worth is spread out. There are three main asset classes – paper assets (investments and cash), business assets (the value/income of a company you own), and real estate.

You get to decide which of the three asset classes you want to focus on. I’m currently only focusing on paper assets and business assets. I consider my eBay side hustle a business. The only real estate I own is the house we live in. Real estate is a great option for building wealth if you’ve got what it takes to be a landlord. Paper assets are the most passive option for growing your net worth because all you have to do is put money in the stock market (preferably index funds).

It’s probably a good idea to have your net worth split up over the three asset classes. It’s good to be diversified because it’s less likely that the value of all the assets will go down simultaneously.

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