savings

How to Calculate Your Net Worth

Run an inventory of your assets and liabilities to find out how much you're worth.

Performing a cash-flow analysis for a single year doesn't give you much information about the cumulative impact of those habits on your financial worth. For this you'll need a net-worth statement. It may sound like a difficult chore, but all you're really doing is totaling up what you own and subtracting what you owe. Our net worth calculator will get you going.

And just in case you need additional help, here are details on how to weave your way through the process:

1. Add up assets.

Start with cash: what you have on hand, what's in your checking account and what you may have squirreled away elsewhere. Next, list money in savings accounts and certificates of deposit.

Premium payments on a whole-life insurance policy add to your net worth by increasing the policy's cash value (the amount you'd get if you cashed it in). Your insurance agent or a table in the policy can tell you the current cash value. Ditto for the surrender value of any annuities you own.

Settling on figures to enter as the current value of your pension and profit-sharing plans is tricky. A program that will provide you with retirement income is surely an important asset, but it's difficult (although by no means impossible) to put a present-day dollar value on income you're supposed to receive in the future. For purposes of this statement, include in your net worth only the amount you could withdraw in cash if you quit your job today. Your personnel office should be able to provide that figure. If you have an IRA, 401(k) plan or Keogh, list its current balance.

Your home is likely to be your biggest asset, so it's especially important that the value you assign to it be accurate. Don't list what it cost you or take a wild guess at its present value. Check around to find out what similar homes in your area are selling for or have sold for recently, or ask a real estate agent for an estimate of current market value. Try to get reliable estimates of the value of any other real estate or business interests you own, too.

The current market value of financial assets such as stocks, bonds and mutual funds is easy to find on recent statements from your funds or broker.

You can get a good idea of what your car is worth by consulting a car-price guide, such as Kelley Blue Book or Edmunds.com. Their results will vary, so average them. For help in putting a value on a boat, motorcycle or other vehicle, start with Nada Guides. The more unusual it is, the harder you'll need to research.

Ballpark figures will do for the value of household furnishings, appliances and other personal belongings. It's best to be conservative in your estimates. One way to do that is to guesstimate that what's inside your home is worth about 20% to 30% of the value of the home itself. Or make your own item-by-item estimate, then slash it by 50%. Use estimated market value (not purchase price) of antiques, furs, jewelry, and stamp or coin collections. InsureU offers a handy checklist to help you track your home inventory. Your home insurer might offer similar tools on its website or mobile app, too.

2. Look at liabilities.

Filling out this portion of the form may be painful, but it shouldn't be difficult. Most liabilities are obvious, and whoever you owe probably reminds you of the debt on a regular basis.

Start with current bills. Next, list the balance due on every credit card and installment debt. There's a separate line on the form for your car loan and another one for taxes coming due. Your home mortgage is probably your largest single liability, and the year-end statement from the lender should show exactly how much you still owe on it. On other lines, list every debt you can think of because whatever you owe is a liability that diminishes your net worth.

3. Behold the bottom line.

Now it's time to fill in the bottom line. If you sold all your assets and paid all your debts, what would be left over? That's your net worth.

It's probably not what you'd like it to be. It's even possible that it's a negative number, especially if you're young and just took out a big mortgage on a house and a big loan on a car. But don't worry, because you've just taken the first step toward starting or revising a budget that can show you ways to beef up your assets and trim your liabilities.

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