How to Calculate a Person's Net Worth

Calculating a person’s net worth can be very valuable and help you plan and assess your current and future financial goals. Net worth is calculated by subtracting all your debt from all of your assets. This sounds easy, but depending on what kind of assets and debts you have, this can be more difficult than you may have thought. Although there are special calculators you can find online that can do the math instantly for you, in many cases doing it yourself and writing out everything can be much more beneficial. Here are the steps you should take to calculate a person’s net worth accurately.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• Basic calculator
• Two sheets of lined paper
• Pencil
• Financial records of assets
• Financial records of debt

1. First, get any important financial records you have of all your assets. This includes, but is not necessarily limited to: stocks, bonds, mutual funds, money market funds, savings accounts, CD’s, IRA’s, 401K’s, an appraisal of your residential properties, and any other personal belongings that have monetary value. Get the most up to date information about as many of these records as possible. Obviously, the more information you have the more accurate the net worth calculation will be.

2. Next, write down on lined paper the different assets you have, and how much you have in each. Do this individually and list one asset and value per line. You’ll notice this can help you to see where most of your assets are located, or if they are evenly divided. In any case, add up the values of all your assets, until you have a total asset value. Write this down and circle it.

3. After that, find any information or documents you have about your current debt. These include, but as with assets are not limited to: student loans, mortgages on your residential properties, credit card debt, and even personal loans between friends and family.

4. Now that you have gotten all your debt records handy, list them all down with their value on another piece of paper. Then go line by line and add up all your debt until you have a total debt value.

5. Once you have a list of your assets and a total asset value, and a list of your debt and a total debt value, take the total asset value and subtract it from the total debt value. Whatever this number comes to, will be your net worth. Unless you knew all of your assets and all of your debt down to the penny, this will be an estimated net worth only.

6. Now that you have a net worth number, keep those two sheets of calculations and do an annual review on them. Change the numbers as necessary, so you can see year by year how your assets and debt compare. This is why listing it out rather than using a calculator online can be beneficial, since you can see exactly where you could improve and what could be changed about your financial well-being!

[survivoryea]

on 9/2/2009 Well written facts-thanks 5*

[kjfitnessink]

on 9/2/2009 Nice summary.