How to Conduct a Comparative Net Worth Analysis
Net worth is important as you approach retirement or other significant life events. Your net worth is the indicator of your financial value including your bank savings, stock holdings, bonds and other assets including homes, cars or boats. Your debt is deducted from this value along with any other liabilities. You can conduct a comparison between yourself and someone you know or just a benchmark that you strive to reach.
Other People Are Reading
Instructions
-
-
1
Set a benchmark standard for your net worth. Imagine your ideal total number and your ideal in each individual category. You may also use a benchmark supplied by a financial adviser.
-
2
Sum your total tangible assets that could be sold for substantial value. These include art, jewelry and other fine items. Next, add your fixed principle assets such as your home, other properties, cars, and boats. The physical object itself is an asset that you own, the liability of any payments still due on the object go in a different category.
-
-
3
Add equity and debt assets such as stocks and U.S. government bonds that you can convert into cash. These must be valued at the current valuation, not the value you paid for them. Add cash and cash equivalents such as savings or checking accounts. These include money market accounts and certificates of deposit.
-
4
Subtract all present liabilities. This includes any outstanding debts including the mortgage payments left on your home and car payments. If you have any other long-term contracts such as an agreement to pay a firm landscaping your yard, these should also be deducted.
-
5
Total all of the components to find your net worth. Compare these to the benchmark you set. Examine each line item to see where you can improve against the benchmark.
-
1
References
- Photo Credit Stockbyte/Stockbyte/Getty Images
