This basic net worth calculation might not be sufficient for certain applications. This means that you might need to calculate your tangible net worth. This number is your net worth, without assumptions or estimations. If you have assets such as copyrights, patents or other intellectual property (IP), you will need to calculate this figure.
You can calculate your net worth by subtracting all your liabilities and debts from your assets. Some items may not be easily sold or are intangible and therefore cannot be included in the calculations that financial institutions use to determine your loan eligibility.
How to calculate your net worth
It is an effective way to assess your financial health. You can use many online tools and calculators like Prillionaires wealth tracker for high net-worth individuals and for people with multiple bank accounts, but it is worth knowing how to do the calculations yourself to get a better understanding of your financial situation. These steps will help you calculate your net worth.
1. Calculate the value of your assets
It is important to start by making a complete list of all assets. It’s easy to forget important items so be sure to include them:
After you have created the list, it is time to calculate the value of each item. Websites like Zillow can help you get an estimate of the house’s value. To find out how much your car is worth, you can visit Edmunds or Kelley Blue Book. Amazon, eBay, and other online retailers can help you determine the value of your other important possessions, such as computers, gaming systems, or recreational equipment.
2. List all your debts
Next, create a comprehensive list of all your liabilities. These are:
These numbers are often available online. However, you might need to contact your bank or loan officer to determine the exact amount. Although listing your liabilities is less fun than listing your assets it is essential to the final calculation.
3. Add the sums to calculate the totals
Next, add up your liabilities and assets to calculate your net worth. This will make it easier to add up the totals of your assets and liabilities. It should be easy to use a spreadsheet to do the calculations. Now it’s time to subtract your assets from your liabilities. Once you’ve done that, your net worth is the result.
What is net worth?
Your net worth is the sum of all your assets minus any debts. Your assets are what you call your assets. What you owe other people is your liability. Your assets are your cash, bank accounts, house, car, and all other valuables. Your liabilities include your student loans, your mortgage, and your car payment. Your net worth is the sum of all assets that you sell and all debts you pay.
How to increase your net worth
A healthy net worth can improve your career prospects, your lifestyle, and allow you to grow professionally. There are many important steps you can take if your net worth is low or negative.
- Eliminating debt is the first step in increasing your net worth. Net worth is the sum of equity and debt. Therefore, reducing debt can increase net worth significantly.
- Smart investments are a great way to increase your net worth. It is important to buy a sensible house or car and keep luxury costs low.
- Not all net worth has to be a sum of money. A positive net worth can be a source of pride for some people. High-stakes debtors, such as those with student loans and medical bills, should rejoice when their net worth turns positive.
Read re: Types Of Liabilities