What is the net worth?
Net worth is equal to assets minus liabilities. You might also define net worth as everything you own less everything you owe. To determine how much money you have, use our net worth calculator.
How Do You Determine Your Net Worth?
To make the most of the net worth calculator, we recommend that you enter data that truly reflects the value of your assets and liabilities.
Taking Stock of Your Resources
To use this calculator to calculate your net worth, you must have a firm grasp of the value of your most priceless possessions.
Assets are, to put it simply, things that you could sell to make money. Assets include things like stocks, bonds, and other kinds of investments in addition to things like homes, automobiles, and even cash in your bank account.
Some assets are more liquid than others because they can be sold more rapidly at a price that represents their present value. For instance, cash is the most movable asset. However, selling other assets would take more time and effort, and you might not get as much money as you had hoped.
For each sort of asset, enter a rough estimate of its current market worth in our calculator. You shouldn’t worry about any unpaid debt, even a mortgage or a car loan. We’ll talk about those in the section titled “Your Liabilities.”
Annual Asset Growth Rate
Calculating the annual rate of growth in the value of your assets can be very challenging. The valuations of four different asset categories, including cash, investments, personal property, and real estate, can be added up using our calculator.
Each of them would probably produce a significantly different annual rate of return, making it challenging to determine the best total yearly growth rate. This calculator starts with a growth rate of 7% in order to reflect fairly cautious returns for real estate and investments with a high stock concentration. You might wish to reduce this even further if you have substantial holdings in cash or other assets with low or no returns.
Understanding Your Duties
Your outstanding financial debts are referred to as liabilities, or the negative side of your personal balance sheet. Simply enter the outstanding balance on each category of debt you owe in our calculator.
Over time, some liabilities turn into assets. That is what happens as you pay down your mortgage and increase the value of your house.
Paying off a responsibility in other circumstances simply implies that you are no longer liable to the person who lent you the money, as when you pay off a credit card balance.
Liabilities’ Annual Growth Rate
It could be equally challenging to determine the annual growth rate of your obligations as it is to determine the annual growth rate of your assets.
Some liabilities, like a car loan or a mortgage, include conditions and interest rates that you have already agreed to. Other commitments, like credit card debt and student loan debt, are more long-term. If you keep adding to your debt or only make tiny, infrequent payments, your liabilities could rise.
If you have a mortgage and a car loan and are making regular payments on each, the growth rate of your liabilities should be zero (in accordance with the conditions of your loan agreement). If you have a credit card amount that you are not adding to and are paying off each month, your obligation growth rate should be zero.
To input a rough estimate of what your obligation growth rate might be, however, if you have credit card debt or student loans that you’re not consistently paying off, take into account the interest rates and balances on those debts.