If you’re thinking about saving for retirement, calculating your net worth can be a useful tool. It might help you evaluate your current situation, set goals and budget for retirement. “Net worth is your whole picture. It shows and tells you what you owe and what you own and how much money you really have,” says Pam Krueger, founder and CEO of Wealthramp in Tiburon, California. Read on to learn how to find your current net worth, what net worth to have in retirement and additional factors to keep in mind when planning your financial future.
Your net worth looks at the overall value of your possessions by accounting for what you own and subtracting your obligations. “Just like a business, you’ll add up the value of all your assets, subtract your liabilities and hopefully the net result will be positive,” Krueger says. Start by summing up the value of all your assets, such as cash accounts, stocks, bonds, retirement accounts and the value of your home. “Do not include smaller items that would be difficult to convert to cash such as clothing,” Krueger says. Then turn to debts and find the total amount you owe on your mortgage, auto loans, credit cards, student loan balances and any other loans. Subtract the total debt from the total assets to find your net worth.
There are several ways to go through the calculation process. You can write it all down on your own with pen and paper or record it in a spreadsheet, or there are apps and online calculators that can help you find and track your net worth.