My Insurance Insider and Finance Blog

Image via WikipediaFinding your net worth is the pre-requisite of your financial planning for your much needed progress. But it should have a definite time frame to measure the progress. It would produce desired results if you calculate it on annual basis. Your net worth is primarily a grand total of all your existing assets minus your present liabilities. This is not a magic or a rocket science. You could calculate your net worth easily and can track your progress from year to year basis. There is always be a room to improve financial progress.

For finding your net worth is easy and it requires some basic financial information for the things you own and the debt that you owe.

• List your fixed assets such as your home and/or your vehicles at their current value.
• Make a list of your current liquid assets such as the balances on your all bank accounts, cash, certificate of deposits or FDs, shares, bonds, mutual funds, ulips, or other investments such as cash value of your life insurance or other retirement accounts.
• Consider listing your valuable personal items such as jewelry, furniture, house-hold items, musical instruments, antiques etc. at their current value that roughly worth more than $500
• Now, add together all assets you have in the list, representing your total assets.
• Now turn to all of your outstanding liabilities or debts such as mortgage loan, car loan, credit card debts, student loan etc. and add them up too.
• List all of your personal liabilities such as credit cards, student loans, or any other debt you may owe.
• Finally, subtract the total liabilities from the total assets you have and you will get your net worth.

Now that you’ve got your current net worth. Sometimes it may be negative instead of being positive. But never mind about it right now. By doing so repeatedly,(using a free software) you’ll develop a good habit of evaluating yourself in the right direction over year-on-year basis. Additionally you’ll be astonished to see the result and your financial progress so far.

Now, a common question may be peeping inside your mind of how to define the value of your home, car, etc. Well, your car and home depreciate every year at a rate standardized by every government or any competent authority for income tax calculation or other similar purposes (insurance etc).

Look out for having those rates of depreciation so that you can simply deduct the total depreciation for valuing your car or property. Of course, prevailing market value is another big factor that does influence your price. Land is also an integral part of your home. So make sure to keep these all in your mind while doing your calculation. Always use your judgment and common sense in valuing your belongings.