Do You Know How Much You're Worth?

So you want to be a millionaire—that's a great goal, but how far do you have to go to get there and how will you know when you've made it?

Regardless of what your goal is or how you intend to reach it, you should know your net worth, and you should calculate it at least once a year. Essentially, your net worth is your total assets minus your total liabilities. And if you are managing your finances and investing wisely, it's entirely possible for you to have a higher net worth than someone living a far more luxurious lifestyle.

For purposes of net worth calculation, you don't need to distinguish between types of assets and liabilities. However, for your own financial management and planning, you need to be aware of the difference between liquid and non-liquid assets, as well as immediate liabilities and long-term debt. Liquid assets are cash or something of significant value that can be sold or otherwise turned into cash quickly. Non-liquid assets are accounts or other items of significant value that cannot be sold quickly, or if they are, would be subject to penalty. Immediate liabilities are debts you must repay within two years, such as automobile loans and credit cards. Long-term debt is payable over a longer period and typically includes real estate and business loans.

Use this worksheet to figure your net worth:

Date _____________
Assets	__________
Cash in personal bank accounts (checking, savings, money market)	__________
Certificates of deposit, bonds, money market mutual funds, etc.	__________
Stocks and stock market mutual funds	__________
Liquid Assets	__________
Personal real estate (home, vacation home)	__________
Real estate investments	__________
Business interests (company ownership or partial ownership)	__________
Retirement plan investments	__________
Cash value of life insurance	__________
Personal property (resale value)	__________
Other assets	__________
Non-liquid Assets	__________
Total Assets	__________
	__________
Liabilities
Automobile loans	__________
Credit card balances	__________
Other short-term loans	__________
Current bills and obligations	__________
Immediate Liabilities	__________
Mortgages	__________
Other long-term debt	__________
Long-term Liabilities	__________
Total Liabilities	__________
Net Worth (total assets minus total liabilities)	__________

 

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