What is your Net Worth?

There comes a point in many people's lives when they want to find out what they are worth.  This is much more difficult to quantify on a metaphysical level; however on a tangible level most people can figure out how much wealth they have created over time.  The definition of net worth is, very simply, the total of all your assets (what you own) less your liabilities (what you owe).

Building a statement of net worth (or personal financial statement) is fairly straightforward (see below for excel template).  It mostly involves creating a list of all your assets including real estate, cash, investments, household items etc. and debts including mortgages payable, credit card debt etc. and assigning a value to them.  In many cases the value can be readily ascertained from a statement or documentation.  However for some categories it is necessary to estimate  eg. car, stamp collection, TV.  In cases where an estimate is necessary,  the best approach is to use net realizable value which is what you can get if you sold it today.  Although you may have paid $25,000 for your car 6 months ago, you may only be able to sell it for $15,000 today.

The largest component of net worth for most people is property.  This is usually your principal residence as well as recreational or rental property.  By the same token the largest liability is usually a mortgage payable.  When assigning a value to your property one can use different sources including property tax assessments, how much you paid for it or the price of comparable properties in the area.  When using current market value it is always good to discount it a bit for potential repairs or a sluggish market.

I have created a schedule which tracks net worth at a specified date (you can enter any date you want) and then tracks it over time.  Most of the major asset and liability categories are reflected.  If there are any questions, please do not hesitate to leave it in the comments section.

Net Worth Template (excel)