Betsey Perra
Cooperative Extension Agent, Home Economics and Family Living
Cooperative Extension
University of Rhode Island
Copyright/Access Information
- what net worth is.
- how to find your net worth.
Your Net Worth is the total value of what you own less what you owe. You can find your net worth by listing all your assets and liabilities on a balance sheet.
Assets are the things you own. On the asset side of the balance sheet, list those things that you own. Even if you still owe money on them, you can list them. Include things like your car, furniture, house, camping gear, savings bonds, money in savings accounts, and cash on hand. List each item and its value. For example, you might list a two-year-old washing machine ($300) and a four-year-old kitchen set ($200). You can figure out what an item is worth by looking at the things for sale in the newspaper. Be honest with your estimates. The only one you will be fooling by stretching or shrinking an estimate is yourself.
Liabilities are things you owe. Include things like car payments and rent or mortgage payments. Your liability is not just the payments, but the total that you owe to pay for the item. That total includes the interest you will pay for the loan. Multiply the amount of each payment by the number of payments left. That will give you the total amount that you still owe (your liability). Also, include the total that you owe for charge accounts and the utility bills you owe. The less you owe the better for you and your net worth statement.
On the balance sheet that follows, fill in your assets and liabilities. After you add the figures in each column you will know what your net worth is.
Add the value of all your assets, and write the total at the bottom of the balance sheet. Add the total of the amounts you owe, and write the total at the bottom of the balance sheet. To find your net worth, find the total value of your assets minus the total amount that you owe.
Is the total value of your assets greater than the total that you owe? If your answer is "yes," then you are in a strong position. If your answer is "no," you should work on developing a spending plan and reduce your debt.
Don't be discouraged. One of your goals might be to cut down on the things you owe. Try to make your bills smaller and pay off some of those you owe. This is the way to make your net worth grow.
Make a balance sheet, listing your assets (the things you own) and their value on the left side and your liabilities (things you owe) and the amount owed on the right side. Make it as complete as you can.
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