How to Calculate Your Net Worth

Video Transcript

"My name is Julie Asti, and I'm a certified financial planner, with Asti Financial Management. And, today we're going to talk about how to calculate your net worth. Calculating your net worth actually is a fairly simple, a simple process. It sounds more intimidating than it really is. Really, what you're net worth statement is going to be, is just a easy math equation, of your assets, minus your liabilities, which will give you your net worth. The way to calculate that, when you're looking at your assets, the asset that you have for your household includes, any liquid savings accounts, cash savings, checking accounts. It also includes any investment, or brokerage accounts, any mutual fund accounts. It also includes hard assets. And hard assets are things like your car, your home, boat, antiques, jewelry, things like that. Those will be all of the different things that would make up the assets. Normally when you're capitaling your net worth you don't go as far down, as you know, furnishings, and rugs, and smaller things in your household. You're looking at kind of larger assets. When you take a look at your liabilities, you don't take into account your annual expenses. For example, your mortgage, your mortgage payment, or your rent, or your utilities. What you're looking at on your liability side are going to be in a short to long term debt, that's outstanding, that you owe to somebody else. So, for example, if you have a credit card, and you pay it off each month, that's not going to be considered a liability, because each month that goes to zero. But if you have a credit card that has an outstanding balance, that you're working towards paying, let's say, five or ten thousand dollars, that's considered an outstanding liability, because it's not going to be paid in thirty days. Your mortgage is an example of an outstanding debt, your car loan, a boat loan, or even any personal loans, that you may owe to parents. Student loan debt is also considered in that equation. So, what you would do is take the value of all of your assets, total that up. You would take the, the outstanding balance of all the liabilities. The total amount that you owe. For example, your mortgage is two hundred thousand, you wouldn't take your annual mortgage payment, it would be two hundred thousand. You would add up all of your outstanding liabilities, and you would just subtract that from your assets, and hopefully, you're going to be able to come up with a positive number. That would put you in the positive net worth territory. That's how you would calculate your net worth. I'm Julie Asti. I'm a certified financial planner for Asti Financial Management. You can learn more about my company and my services at www. astifinancial.com."