Creating your net worth statement is a great place to start your financial planning journey. Your net worth is the single number that best describes your financial situation.
Net worth is defined as follows:
Net Worth = Assets – Liabilities
Your net worth is everything you own minus everything you owe. It’s pretty simple to create a spreadsheet to calculate it. Going through the exercise of manually creating the spreadsheet is a great way to get your finances organized. And it's often true that “numbers that are watched improve”. Once you are aware of your net worth and tracking it, you will consciously and subconsciously make better choices to improve it!
How to calculate your net worth
- Download our starter template for Google Docs or Excel
- At the top, replace the example data with each financial account to your name that has a positive value (savings, checking, 401k, Roth IRA, investments, stock, bitcoin, etc)
- Then list every big asset that you own (house, investment property, car, etc). Don’t bother with stuff smaller than a car.
- Then list every single DEBT that you have: credit card, student loans, car loan, mortgage, medical loans, personal loans, etc. Make sure to list the balances as negative numbers… debts count against your net worth.
- The sum at the bottom of the “Balance” column is your net worth!
It should look something like this:
An example net worth statement
Net worth FAQs
- Q: Should I count my house even if I still owe money on it?
A: Yes, count the full value of your house as an asset (it's fine to use a ballpark estimate from Redfin or Zillow), and on a separate line the balance of the mortgage as a debt. The difference between the value and the balance owed (the equity you have in your house) counts toward your net worth. - Q: Should I include the value of my car?
A: You can if it's significant. I would use Kelley Blue Book or a similar pricing service to get an approximate current value. As with a home, make sure to add the balance of a loan as a negative if you have a car loan! Cars lose value over time, so make sure to update this at least annually. - Q: What other assets should I include?
A: It doesn’t need to be a perfect accounting of everything you own. Don’t worry too much about stuff smaller than a car. But if you have fine art, jewelry, or anything else significant (i.e. more than $10K or what's significant for you), I would add it there. - Q: Should I add the value of my small business?
A: It's worth adding as a line item so you keep track of it, but I'd be very conservative about the value as small businesses are very illiquid (you can't quickly convert it to cash). Entering just the "book value" (assets minus liabilities of the business) is a reasonable approach.
Upload Your Statement
If you have an upcoming Nectarine meeting, you can upload your net worth statement to the secure vault in your Nectarine account so your advisor has access and can review before your meeting. If you created yours in Google Drive just click File/Download/Microsoft Excel which will give you a file to upload.