Doing a net worth statement each year is crucial to your financial health. People get intimidated by the idea of determining net worth because they donít want to see negative results. I compare it to getting on a scale Ė just because you avoid getting on the scale does not change your weight. Itís the same with money; you are where you are financially if you write it down or not. Hereís how to determine your net worth.
1. Write down the value of everything you own.
2. Then subtract from that amount everything you owe (Assets Ė Debts = Net Worth).
3. Use that information to create strategies to get where you want to be.
A net worth statement is a tool you should use annually to compare where you
are from past to present and to make sure youíre headed in the right
direction. If you find your debt growing and your savings shrinking
for reasons other than school loans or a mortgage, it gives you a chance to
stop negative behavior. Then you can figure out how to turn it around, such
as spending less and saving more. For a free Net Worth
Statement form, visit the LifeTimes
Web site (Winter 2011):