How to Figure Net Worth
Net worth is equal to assets minus liabilities. It estimates the cash you would have if you were to liquidate all your assets and pay off all your debts. Net worth estimates are usually required to apply for loans, mortgages, credit cards or for opening bank and brokerage accounts. Estimating net worth is a straightforward process, but getting all the information together can take some time.
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Instructions
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Gather the relevant financial information. You can use one of the many online net worth worksheets as a guide.
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Estimate your assets. These are possessions with financial value such as bank balances, term deposits, the cash portion of your life insurance policies, stocks, bonds and mutual funds. Include tangible assets such as cars, cottages, houses, boats and jewelry. List the assets on the worksheet along with their current market values, using the most recent financial statements or appraisal documents available. Add them up to estimate your total assets.
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Estimate your liabilities. These are debts with financial value such as mortgages, lines of credit, student loans, personal loans, brokerage margin balances, credit card balances and car loans. List the liabilities on the worksheet along with the current balance owed using the most recent financial statements available. Add them up to estimate your liabilities.
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Calculate your net worth by subtracting liabilities from assets. For example, if your assets were $100 and liabilities were $75, then your net worth is $25.
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Tips & Warnings
Include investment accounts that you control, such as college funds for your kids, in the net worth estimate. Do not include personal items or common household items such as shoes and food processors.
Prepare a separate joint net worth estimate if you and your spouse are jointly opening an account or applying for a loan. Prepare a family or household net worth estimate if there are multiple income earners living in the same house. Include only assets and liabilities that you jointly own or owe.
Do not over- or under-estimate your net worth. Use the most recent bank or brokerage statements. Estimate the current value of your home using the most recent listing prices in your neighborhood.
