Welcome to my three part series on Net Worth! In this second part I discuss an easy way to calculate your net worth. But first, I will outline for you all the pieces of information that you will need in order to properly calculate your net worth.
Understanding your Assets:
- Real Estate – the value of your home is probably one of the largest assets that you own. I just purchased my first home, so I am using the purchase price as the value of my home as part of my assets. If you have lived in your home for many years, an appraisal may be in order for you to understand the current market-price of your home. If you have real estate friends that you can get a hold of to give you a ballpark figure on what your home is worth, this will help you calculate your net worth.
- Investments – For some of us, this asset class will be minimal, or very large. Investment assets can include your company pension fund that is under your control, registered savings plans like an RRSP, TFSA or 401K retirement plan and don’t forget any stock accounts or other investment vehicles that you are using
- Cash – As part of calculating your net worth, do not forget to include your everyday checking account and savings accounts that are sitting in cash. Keep in mind that when calculating your net worth – this is simply a point in time and your mortgage payment may have just come out, or you just received a paycheque. What we’re trying to do here is create a trend of where you are at so we can really get a handle on what is our net worth.
Understanding your Liabilities:
- Mortgage – the value of your mortgage is considered a liability. This is money you owe to the bank. Most credit monitoring services will list your mortgage balance in your account.
- Home Equity Lines of Credit, and other lines of credit – if you have a HELOC or other lines of credit that you are using, such as a consumer line of credit, you need to make sure that you capture the balance owing as a liability.
- Car Loans – the balance of your car loan is money that you owe, so make sure you don’t forget this.
- Credit Card Balances – all of your credit card balances that you owe are a form of liability and must be captured as part of calculating your net worth.
- Student Loans – these are sometimes long term loans for people, but make sure this is also taken into account when calculating your net worth.
Now that we have a good understanding of what all of these assets and liabilities are worth, we can plug them into an excel file to calculate your net worth. I have used a simple template from Microsoft Office and fine tuned it a bit in order to see all the information that I would want to see in my net worth calculation. I have also included a few more tabs of other information that I like to track, such as my income, and also a running list of my monthly net worth values over the last four years.
Here is an example of a net worth summary that is included in my 2019 Calculate My Net Worth excel template. Below are steps for you to fill out the template for you to calculate your net worth.
- Click on the ASSETS tab and fill out all of your assets as described above. You can add or remove lines here and customize your text no problem.
- Click on the DEBTS tab and fill out all of your debts as described above.You can add or remove lines here and customize your text no problem.
- There you have it. You can now click on the Summary tab and see the pie graph similar to what I showed you above of your own personal net worth.
- Click on the Historicals tab and copy your net worth so you can keep track every month. I’ve formatted a graph to show the progression in your net worth!
- Click on the Income tab so you can also add your annual income here so you can keep track of that.
I really hope that I have made it easy for you to calculate your net worth. If you have any questions, comments or concerns, please feel free to head over to my contact page and send me an email. I’m here to help!
Our three-part Net Worth Series:
- What is Net Worth? What Does it Mean? Who Cares About It? Why You Should Track It
- How to Calculate Your Net Worth – and a friendly excel template to help!
- What should my Net Worth Be at My Age?