How to Calculate Your Net Worth Based on Your Present Assets and Liabilities

Figuring your net worth helps you determine your financial health.
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Assessing your finances today helps you plan for the future. Calculating your net worth, or your personal wealth, lets you know where you currently stand financially — like peering at your financial scoreboard. Net worth equals your assets minus your liabilities. Assets are things you own that have value, such as a house. Liabilities are amounts you owe, such as a mortgage. If you have more assets than liabilities, you have positive net worth — a club in which you want to be a member. If your liabilities exceed your assets, you’re in negative territory.

Step 1

Add together the amount of your physical currency and the balances of your bank accounts and money market accounts to determine your total cash-equivalent items. For example, assume you have $1,000 in physical money and $5,000 in a checking account. This would be a total of $6,000.

Step 2

Determine the current market value of your investments, such as a 401(k), individual retirement arrangement, pension, stocks and bonds, and the cash value of your life insurance policy. Calculate the sum of these values to determine your total investments. You can ask your employer and insurance company for the value of your pension and life insurance policy, respectively. You can find out the value of your other investments with a glance at your recent account statements or quick call to your broker. In this example, assume you have $30,000 in a 401(k) and $10,000 in an IRA. This would total $40,000.

Step 3

Estimate the current market value of your real estate and personal property, such as your car, collectibles and jewelry. Add these values together to determine your total property value. Current market value is the price you for which you could sell an item today. You can ask a local real estate agent about the approximate value of your house. Info from used car pricing websites and auction websites can help you estimate the value of your personal property. In this example, assume your house is worth $250,000, your car is worth $20,000 and your personal property is worth $15,000. These would total $285,000.

Step 4

Add up the amount of your cash-equivalent items, investments and property to determine your total assets. In this example, adding $6,000, $40,000 and $285,000 would equal $331,000 in total assets.

Step 5

Add together the current balances of your debts, such as mortgages, auto loans, student loans, credit cards and outstanding bills, to figure your total liabilities. You can find these balances on your most recent statements. Continuing with the example, assume you have a $220,000 mortgage, a $15,000 car loan and $10,000 in student loans. Add $220,000, $15,000 and $10,000 to get $245,000 in total liabilities.

Step 6

Subtract your total liabilities from your total assets to determine your net worth. Concluding the example, subtract $245,000 from $331,000 to get $86,000 in net worth.

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