How to Calculate Your Net Worth

Your net worth can be a useful tool to measure your financial progress from year to year. Net worth is essentially a grand total of all your assets minus your liabilities. There is no magic net worth number, but you should use your net worth to track your progress from year to year, and hopefully see it improve.
Net worth is a single amount representing how much money a person would have if he sold all of his assets and paid off his debts .Your net worth can be a useful tool to measure your financial progress from year to year. Net worth is essentially a grand total of all your assets minus your liabilities. There is no magic net worth number, but you should use your net worth to track your progress from year to year, and hopefully see it improve.
Calculating your net worth can be easy. 
Here's How:
Your net worth is a snapshot of your finances. To determine your current magic number, the first step is to take a look at all of your assets, which are anything of value that you own. Make a list of all these items and next to each, list the amount it's worth. These typically include:

Assets
  1. Real Estate -- the current market value of property (house, condo, land, etc.) you own, even if you have a mortgage
  2. Cash -- any physical cash and coins you have
  3. Funds in the bank -- all the money you have in a savings, or money market accounts, and any certificates of deposit(CDs)
  4. Stocks, bonds and mutual funds: also list savings bonds
  5. Retirement accounts -- includes pension or any other retirement account funds
  6. Life insurance -- counting any cash value you have in the policy
  7. Motor Vehicles: the current  value of any cars, motorcycles, etc.
  8. Personal Valuables -- including the market value of jewelry, collectibles ( artwork) and furniture
  9. Money you're owed -- as long as you have a reasonable expectation of being paid back

In reality, just because you own these assets doesn't mean you'll be able to access their monetary value today. Only cash and other highly liquid assets -- things that you can exchange for a good market value quickly -- are easily accessible. Although it might take months to turn real estate into its true cash value, use the full market value when calculating your net worth today. If you're unsure of what something you own is worth -- like an antique -- is worth, find a professional valuer.

When you're done listing assets, make a separate list of liabilities and amounts. Liabilities are any debts or payments you owe to someone else. Here are the most common:

Liabilities
  1. Mortgage -- the principal or amount you have left to pay on your mortgage(s)
  2. Home loan -- how much you owe if you have a home loan
  3. Automobile loan -- the amount you have yet to pay on your car(s) and other motor vehicles
  4. Student loans -- the amount left on student loans
  5. Credit card debt -- any balance owed to a credit card company

Once you're finished taking stock of all of your assets and liabilities, it's time to calculate the magic number.
The formula can be expressed simply as:
Net worth = assets – liabilities
 Be conservative with estimates, especially with home and vehicle values. Inflating the value of large assets may look good on paper, but may not paint an accurate picture of your net worth.

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