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Calculating Your Net Worth – When, Why and How

If you’ve resolved – as many of us do this time of year – to organize your financial information and plan your financial future, you may wonder where to begin. The best starting point is to determine where you stand today, financially speaking. A net worth statement provides such a “snapshot” of your current financial position. It’s also a useful tool for setting goals and measuring your progress toward those goals.  
A net worth statement shows the difference between your assets (the current value of everything you own) and your liabilities (all the debts you owe). When your total assets exceed your total liabilities, you have a positive net worth; if your liabilities exceed your assets, your net worth is negative. In either case, a net worth statement can quickly indicate which areas of your financial life are on track – and which are not.
Calculating your net worth is a fairly simple process. By referring to your most recent account statements, or by going online to obtain account balances, you can, with relative ease, determine the value of your assets and the balances of any liabilities you have. If you use financial planning software, take advantage of any net worth worksheet that the software provides. You can also use the net worth calculator available at no cost at www.kiplinger.com/tools/networth.html or contact us at Grand Wealth Management and we’ll provide you with a net worth worksheet.
Figuring out your net worth at this time of year makes perfect sense, because the 2006 financial information you’re receiving for tax purposes will help you determine asset values and debt balances. In fact, you should make it a habit to update your net worth statement this time every year, because you’ll be able to see the yearly progress you’re making toward your goals. Also, you may find that you use your net worth statement for other purposes, such as applying for a mortgage or working with an estate planning attorney to update your estate plan.

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