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: Open the Calculator
Open this Net Worth Calculator.
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.