How to Calculate Assets & Liabilities

Some of your assets might come with restrictions.

Some of your assets might come with restrictions.

Improperly calculating your assets and liabilities can lead to thinking you have enough money to cover an emergency when you don’t or investing money when you shouldn’t. Properly listing and analyzing your net worth will help you handle emergencies, take advantage of financial opportunities and stay on track with your short-term and long-term financial goals.

List Your Assets

To begin calculating your assets and liabilities, write down all of the assets you believe you have. Include cash savings, retirement accounts, mutual funds, your home, securities and any life insurance policy you can cash out. To determine what assets you have available in the event of an emergency, list items you can quickly sell, even if requires selling at a discount. This might include your car; musical, sports, gaming and fitness equipment; furniture, jewelry, paintings and electronics; and items in your closet, garage and attic. You don’t need to value each personal item: Just give yourself a ballpark figure on items you think have quick cash value. If you believe you will have a tax refund, put that on your list.

List Your Liabilities

Determine your liabilities, including what you owe on student loans, car leases or purchases, credit cards and your house. If you are paying for anything on time, such as furniture or a flat-screen TV, include that. Don’t forget money you owe family or friends. If you want a snapshot of what you owe today, include any taxes you owe if you are an independent contractor and make quarterly payments. Consider your liabilities throughout the year. For example, if you are calculating your net worth to determine what you might have available to invest three months from now, remember that you might have quarterly tax payments and insurance premiums due between now and then. Those payments could decrease your net worth by thousands of dollars compared to your net worth today.

Analyze Your Lists

Not all of your assets will be available on short notice. For example, that $40,000 in retirement money you see on your list might be taxable if you try to use it before its maturation date. Calculate the different values your assets will have at any given time. You might be able to borrow from a 401(k) without taking a hit if you put the money back within a short period, but taking it out for longer than a specified period can cost you a hefty penalty. Don’t value your car or home based on what you owe on it. Check the Kelly Blue Book value on your car to determine what you might likely get for it if you need to sell it. Check the current value of your home using Zillow’s estimate of your house and factor in any costs you’ll have to get it ready for showing and close the sale.

Determine Your Net Worth

Subtract your liabilities from your assets to determine your net worth. Use a variety of scenarios, including emergency and non-emergency situations. In an emergency scenario, you can sell your furniture quickly and buy more later, while selling your house might not be realistic. If you are looking at your net worth as it relates to your retirement strategy, you won’t include household assets.


About the Author

Sam Ashe-Edmunds has been writing and lecturing for decades. He has worked in the corporate and nonprofit arenas as a C-Suite executive, serving on several nonprofit boards. He is an internationally traveled sport science writer and lecturer. He has been published in print publications such as Entrepreneur, Tennis, SI for Kids, Chicago Tribune, Sacramento Bee, and on websites such, SmartyCents and Youthletic. Edmunds has a bachelor's degree in journalism.

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