How to Calculate Your Net Worth

3 simple steps for gauging the value of your personal wealth

Don't guess at your personal wealth. Figure out your net worth.

If you want to get a good assessment of your personal wealth, you need to know your net worth. This significant number can give you an understanding of how financially stable you are, or how deep in the red you are. Check out this step-by-step guide on how to calculate your net worth.

List your assetslarge and small: Assign a dollar value to them. Your assets include your home(s), any property you own, broker and bank accounts, and any businesses you own. Include personal valuables, too. Collectibles, gold, silver, and jewelry are also considered assets. But be careful. “Don’t call something an asset if there’s debt assigned to it that represents 80% of what it’s worth,” warns Jesse Abercrombie, a financial adviser with Edward Jones in Farmers Branch, Texas. “If you have a house worth $1 million but you owe $800,000 on it, you really can’t consider it an asset yet,” he adds.

List total liabilities: Next, list any outstanding debt, including credit card balances, student loans, and car and mortgage payments.

Do the math: Add up the items in each list. Then subtract your total liabilities from your total assets. The number you’re left with is your net worth. You want this number to be positive. If it’s negative, it’s a good idea to schedule an appointment with a financial planner. “It’s important to measure your net worth annually,” says Abercombie. “It’s good to get a gauge on what direction you’re going in financially.”

Renita Burns is a writer and content producer at BlackEnterprise.com.

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