Net Worth = total assets – total liabilities.
You can calculate this with a personal financial statement. A personal financial statement is a record of your financial worth as an individual. Married couples typically complete just one personal financial statement. Statements can be quite simple for people with limited assets and liabilities or more complicated for individuals who have accumulated considerable assets.
There are several reasons why you want to consider completing a personal financial statement annually. First, it’s a good record of your financial information in the event an emergency happens and someone else needs to manage your affairs. Second, updating your statement annually helps you know whether you are gaining or losing net worth. Finally, keeping your financial statement updated allows you to quickly provide a statement to a financial institution when seeking a loan.
Examples of assets are:
- Cash – actual cash or liquid accounts at financial institutions (checking, savings, certificates of deposit)
- Investments – stocks & bonds
- Real estate owned – homestead and non-homestead (second home, investment property)
- Other personal property – recreation vehicles, antiques, etc.
- Retirement type accounts – IRAs, 401Ks, Pensions, Profit Sharing
- Cash value of life insurance – (not the face value)
- Equity in other companies – partnerships, proprietorships, LLCs, etc.
- Debt owed to you
Examples of liabilities are:
- Real estate mortgage
- Other loans – auto, personal loans, life insurance loans
- Credit card debt
- Annual Real Estate Taxes – considered a liability because you owe them each year
- Unpaid income taxes
Financial statements can be obtained by contacting your financial institution or use AbbyBank’s Personal Financial Statement. What is your Net Worth?