How to Determine Net Worth

Your net worth is the amount of your total assets minus your total liabilities. To determine net worth, you will need to assess both. Net worth is a good way to find out where you stand financially, and what your financial progress is.

Difficulty:

Easy

Instructions

1. Determine your liquid asset value. Liquid assets are what you have that can be turned into cash immediately. These include bank accounts, cash value life insurance or anything else that you could turn into cash. If the cash value of your life insurance policy is not clearly stated, ask your agent.

2. Take stock of your possessions. If you own a home, check to see what the current value of it is. The same goes for cars, jewelry and furniture. Their value is not what you paid; the value is its current market value (for example, the blue book value of your car as it stands). It is best to have a conservative hand when calculating the worth of your possessions. Err on the side of caution unless they are collectibles or antiques.

3. Total your investments. Savings accounts, IRA's, stocks and bonds are all investments that you should add to your other assets to determine net worth.

4. Consider your liabilities. Add together any outstanding debt that you currently have-such as credit card debt, student and automobile loans. To determine net worth, be sure to add to these liabilities anything that you may be paying for long term such as a mortgage. When listing a value to your home, ask an agent for what your house could sell for on the market, or check similar listings for a realistic price range.

5. Calculate the difference. Subtract your liabilities from your assets. This total amount is your net worth.