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Calculating Your Net Worth – What’s It Worth to You?

There are lots of ways to take stock of your financial situation. For many of us, a quick look at our checking, savings and credit card accounts gives us a brief snapshot. But what if you’d like to dig a little deeper and learn a little more about your financial picture?

Enter net worth, the calculation to use when you really want to see the big picture. What is net worth? Speaking in financial terms, your net worth is the difference between your assets and your liabilities; speaking in non-financial terms, it’s the value of what you own minus what you owe.

When starting to calculate your net worth, you’ll need to think about all the items you own, including:

  • Current market value of your home
  • Current Blue Book value of your car(s)
  • Your checking and savings accounts
  • Your 401(k) or other investment accounts
  • The items in your home, including jewelry
  • A second home or boat

Add the value of all of these items to get a realistic picture of your current assets.

Next, you’ll want to understand your liabilities—the amount you owe. To do this, you’ll want to factor in:

  • Your mortgage and/or home equity line of credit
  • Car loans
  • Credit card debt
  • Student loans
  • Other bank loans or personal loans

Finally, take your liabilities number and subtract it from your assets number to get your net worth. If you currently have fewer assets or a lot of debt, your net worth may be negative.

The good news is that calculating your net worth can be a great way to motivate yourself toward a goal—especially if you are hoping to pay down debt or increase the amount you’re saving. Seeing your number on paper can help you visualize what the results would be if you paid down or saved a little more each month.

Interested in calculating your own net worth? Let Jemma Financial help you. We’ve created a free downloadable Net Worth Spreadsheet with all the information you need to find out what your net worth is so that you can create a plan to increase it over time.

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