A guide to tracking your net worth along with a free template to support the process.
Tracking your net worth is a highly useful way of measuring your financial progress month on month. The process itself is actually quite simple and once tracked it can be a great motivator for success. In this short guide, I’ll be giving away a Free Net Worth Calculator and will also detail the process of calculating your net worth.
Tracking net worth isn’t just for wealthy kinglike beings that spend their time counting gold in their treasury. It is actually a very useful tool for monitoring your finances regardless of your age or financial situation. If you’re serious about taking your finances to the next level then you should consider net worth as an important metric to inform your long term progress.
Tracking net worth not only gives you an indication of how much you have accumulated but also gives you insight into how fast you are improving this figure. For some this can be a reality check and for others… a challenge!
In This Guide…
- What You Need To Know About Net Worth
- How To Calculate Your Net Worth
- Download Your Free Net Worth Calculator!
- Fantastic Net Worth Resources
What You Need To Know About Net Worth
Net Worth doesn’t care about your income. Which is great, as wealth is not about how much you earn, it is about how much you keep from what you earn. (Tweet This!)
In this respect, net worth can be one of the most accurate metrics to measure your financial status.
Calculating net worth for the first time is a great way to analyse where you stand with your finances. However, if you can track net worth over a number of months and years it will tell you even more…
Tracking net worth over time will give you an accurate representation of the rate at which you have improved your financial position in the past and where you are likely to be in the future. This can often often be a real shock but it is important to have the data at hand to further inform your life/finance decisions.
If the math is just too much, some wealth management companies such as Investment Quorum offer a ‘net worth analysis’ service to keep track of this for you.
How To Calculate Your Net Worth
Net worth is calculated by adding up all of your assets and taking away all of your liabilities. We’ll now go through a 3 step process to break this calculation down and give you an accurate measurement of your net worth.
Step One: Calculate Your Total Assets
The first step is to get together an estimated value of all of your possessions.
If you’re a homeowner, your biggest asset in terms of net worth is often your home. Houses frequently change in value so don’t just use the price that you originally paid for your house. Take a look at Rightmove to find similar sized properties in your area.
Unlike houses, car values depreciate in value over time. Look for similar model & age vehicles on Autotrader to get an idea of a realistic value of your car.
Here’s what you should look to include in your asset column:
+ Your House
+ Your Vehicles
+ Cash / Money in Current Account
+ Total Balance of Savings Accounts & ISAs,
+ Shares and other Investment accounts
+ Current Value of Your Pension
+ Money Owed to You
+ Other Properties (Real Estate)
+ Any other assets – This could include any valuable possessions such as jewellery, professional equipment or high value electronics.
Adding all of the above together will give you a figure for your total assets.
Step Two: Calculate Your Total Liabilities
The next step of this process is to add up all of the money you owe to various companies, organisations and individuals. This could include:
– Total Owed on Your Mortgage
– Total Owed in Car Finance
– Total Owed in Student Loans
– Total Owed on Other Mortgages (Buy to Let)
– Credit Card Debt
– Any Money Owed on Other Loans
– Any Money Owed to Family or Friends
Adding all of the above together will give you a figure for your total liabilities.
Step Three: The Final Calculation
The final step is to take your total liabilities away from your total assets: shown in the example below:
Your Free Net Worth Calculator
I’m very excited to be giving away this free template for both calculating your net worth and also for tracking it over time. Click the link below to get started!
Some Awesome Net Worth Resources
If you’re looking to explore the topic a little further, I’d highly recommend you check out the following resources: