How to Create a Snapshot of a Financial Situation

Knowing your financial situation by assessing your assets and liabilities helps to determine your future financial strategies, obligations and goals. Determine this financial snapshot by calculating your net worth, which is a summation of total assets owned by you, minus total debts you owe to others.

Instructions

Difficulty: Moderately Easy

1. Collect all financial documents that you own such as bank statements, credit card bills, tax receipts, investment documents and loan papers. Categorize them as the amount you own and the amount you owe. Having the papers handy helps to create an appropriate financial picture.
2. Make a complete list of all assets starting with liquid assets such as cash in both checking and savings accounts and free cash on hand. Include investments made in shares, bonds, mutual funds and certificates of deposit. Take into consideration work related reserves such as Individual Retirement Accounts, 401(k), stock options and other retirement programs.
3. Include property and real estates such as land, machinery, buildings, furniture, homes that you own, jewelry, antiques, cars that are paid for, RVs and boats. Intangible assets like goodwill, copyrights and patents are also considered for evaluation.
4. Estimate a fair market value for all of your items, which can be an approximation that a reasonable buyer would pay in the current market scenario. This amount can be higher or lower than what you paid initially to acquire these items.
5. List the liabilities or the total amount of debt that you owe to others. This debt includes loans taken out for your education, home or car as well as the mortgage on your house, balances on credit cards and income tax owed to the government. Account for current liabilities such as bills and expenses in the short term.
6. Find your net worth by subtracting the total liabilities from your total assets. A positive or a negative figure gives you to get a snapshot of your financial situation. This helps you to prioritize your financial plans, establish a savings and budget program and make new investments and commitments.