Nina's Soap

Your net worth is the benchmark of your wealth. Your net worth is the difference between what you own and what you owe. It is not how much you make that makes you wealthy but rather, how much you keep. Periodically, list and track all your assets and their value as well as all your liabilities. The difference between your assets and your liabilities shows whether you are building wealth or burring yourself in debts. It is time we stop judging and comparing each other based on how much we make. Although it is good to have a high salary, it doesn’t necessary make you wealthy if you spend it all each time. In reality, your net worth calculation doesn’t even take your income into consideration. It is influenced by what you do with your income. As much that it is important you know how much you earn, it is equally important to know how much you are worth.

Different Category of Assets

Fixed Assets:

This category includes:

Home

Your primary residence if you purchased it is your fixed asset. You can look up the value of your home on your “County Assessor” page. Every year, the county should send you a letter that has the value of your property and the property tax to pay especially you live in one of the states that collect property tax. To assess your county assessor’s page, google “county assessor”. Click on the link and select your state and county or city.

Cars

List your cars and be honest with yourself to estimate the amount you would sell them if you have to. Your fixed assets are generally your home, cars, boats, and RVs. Homes increase in value while cars loose value.

It is important to know what type of assets to accumulate in your wealth portfolio. The main asset for many people is their main home. If you live in it, you spend money to maintain it. Unless you would sell it to downsize if necessary, your main home is your shelter and should not be the only asset in your portfolio. Any valuable possession that doesn’t generate cash flow is either costing you money to maintain or is losing value. Purchase a house that just fits your need and save your resources for other types of assets.

Liquid Assets

Cash

List your cash available at the moment you update your net worth balance sheet. A balance sheet is a capture of your assets against your liabilities at a specific time. Therefore, the amount constantly changes for some categories. Cash is one of them. List your savings and checking.

Stock Investments

List your brokerage accounts and their market values.

Roth IRAs / IRAs

If you have a Roth or a traditional IRA, you should look up the account value.

401K / 403B

Some employers offer 401k or 403B. If you invest in your employer retirement plan, list your retirement account value.

Employer Stock Options

List the value of your employer stock you invest in it.

Petty Cash

Count all the cash you have on hand at house.

Belongings

List them and estimate how much you would sell them for cash if you are in need. They include jewelry.

Business Assets

Liquid Assets: Record the amount of cash you have in your business bank account.

Fixed Assets: You can list investment property value, the market value of your office equipment and furniture.

Inventory: If you manufacture goods to sell, record the value of the goods in your inventory as well as the raw materials.

Total all these assets to find the total value of your assets.

Liabilities

Home mortgage: record the outstanding balance on your last statement.

Credit card debts: record the balance on all of them.

Car loans balance

Student loan balance

Business loan balance

Total all you owe and you would know your total liabilities.

Subtract your total liabilities from your total assets. The result is your net worth.

If your net worth is positive, you own more than you owe. If it is negative, you have more debts than assets. The goal is to have a positive net worth and to keep increasing it. In the Millionaire Next Door written by Dr. Stanley, you are an accumulator of wealth if your net worth is equal or more than your current gross annual salary times your current age divided by ten.

If you are married, calculate your net worth by listing your spouse and your assets as well as both you and your spouse liabilities. You are an accumulator of wealth if your net worth is equal or more than (you + your spouse) gross annual salary * (you + your spouse) current ages * 1/10

How often should you calculate your net worth?

I would recommend twice a year. Below is our net worth to give you an example. However, you would need to join our Credit Control Membership to access it if you have not subscribed yet. It is a free membership. If you like the template, feel free to download it and start calculating your net worth. Feel free to leave us your comment or ask any question if we can help.