What Is Included in Your Net Worth?
Total U.S. household net worth was $54.2 trillion at the end of 2009, according to the Federal Reserve. To make this figure more applicable to everyday Americans, it's useful to know how to calculate your own household's net worth. Net worth is a simple calculation, the result of the amount of the household's assets -- items worth cash -- minus the household's debts or liabilities -- money owed.
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Monetary Assets
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Investments, including stocks, bonds and valuable annuities, are assets. Anything cash, whether a savings account, money-market fund, CD or the change in your piggy bank, is also an asset. Retirement accounts, even if you face barriers to early withdrawal, are assets for the purpose of calculating net worth. Your 401k, IRA and SEP should therefore be included.
Property Assets
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The value of your primary home, even if you're still paying off a mortgage, is an asset. Any vacation properties, second homes, machinery, jewelry and furnishings are assets. If you hold a life insurance policy, include its cash value, not the amount that would be paid out under a claim. If you have pieces of artwork, these are also assets; so are any collectable items you own.
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Home-Related Debt
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Although a home is held as an asset, the mortgage on it is a debt. A home-equity loan is similarly a liability that decreases your overall net worth.
Other Debt
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All other household debt, including consumer credit cards, store credit cards, student or bank loans and lines of credit, reduces your net worth. If your bank account is overdrawn, this is also a debt, even if the overdraft is approved by your bank.
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References
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