We’re all busy, but I strongly encourage you to take just ten quick minutes a month to calculate your net wroth. Tracking your net worth can be one of the biggest eye openers for anyone that wants to improve their financial future. When I began tracking my net worth, my whole view towards money changed. I realized that every dollar I saved brought me one step closer to a life without financial worry.
Next Monday I will be starting a monthly series where I share my net worth history and progress towards becoming financially independent. Before we dig deeper into my net worth though, let’s first explain how you can calculate your own net worth in just 10 minutes.
First Minute: Print the Calculator
Download and print a copy of this Net Worth Calculator Template PDF I’ve created for you.
(Yes, it is easier to track your net worth in a spreadsheet, but making your progress tangible and visible is extremely important. That is why I want you to print it out.)
Next Five Minutes: Get the Numbers
Look up and record the balances for all of your bank accounts, credit card statements and outstanding loans. Go straight down the list filling out every applicable line. If you don’t know the exact amount that an item such as your car or house is worth, just ballpark it for now and move on to the next line.
Next Minute: Do the Math
Add up all of your assets and all of your liabilities. Subtract your total liabilities from your total assets to determine your total net worth.
Final Three Minutes: Think It Over
Look at this number. Are you surprised? Don’t let this number stress you out or get you down. Depending on what stage of life you are in, you may very well have a negative net worth. If you are still in school or just graduated from it, you may even have a six figure negative net worth.
The key to this exercise is not to just calculate the number once and forget about it. The main reason to calculate your net worth is to track your progress over time on accomplishing your financial goals. When you see your number, realize that there are always going to be people that have more than you and people that have less than you. Don’t make it a competition with others. Make it a competition with yourself.
Calculating your net worth is a simple exercise that can be completed once a month to track your financial growth. Even when you may feel like you are just treading water or living paycheck to paycheck, you might be missing the fact that you are paying down your debts and that your personal or investment savings are continually growing.
Remember, as long as your net worth continues to grow, you are headed in the right direction. Continue to strive for bigger gains each month and set goals for the different line items.
If you liked this exercise, please share this article with your friends on Facebook or Twitter below. If you want to read my monthly net worth update next Monday, sign up for the free Pocket Changed newsletter.
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This is an eye-opening exercise. Looking forward to the series.
Thanks Angela! I have been calculating my net worth for a while now and it is the single most important piece of financial motivation for me.
i’m really quite afraid to find out my net worth. i know it can’t be much given how often (and much) i spend.
p/s: unrelated but i like your name. (caleb, i mean)
I wouldn’t let the fear of finding out the number keep you from calculating it. Just think of the first number you get as your starting point. You can improve from where ever you start and you have to start somewhere.
Net worth is one of things that people in our generation have been slow to pick up on, I believe. This is a super easy exercise and really gets you looking at the big picture of your personal finances, and not just what you see on your bank account balance.
Loving your work Caleb!
Thanks Vivek. Once someone begins to understand all of the different pieces of their net worth they can quickly grasp their entire financial picture.
Hey Caleb,
This is a great exercise. You can automate a lot of this with some online services. Bank of America has an online banking feature called My Portfolio which allows you to pull asset and liability balances from other accounts, including accounts at other institutions. You can even pull the value of your house (according to zillow) and run it against your mortgage. We use that to track our net worth over time and it’s right in our online banking. There are some clever tracking tools that help people see, categorically, where they spend money.
Though, there is something to be said for doing it manually at first because it forces one to think about assets and liabilities.
I agree John, I use Mint which totally rock for this.
I didn’t know that Bank of America had that feature. I knew that Mint had it, and I’ve used networthiq.com before.
Thanks for the resources!
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