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If you\u2019re looking to monitor the progress of your personal finances one way to do so is by tracking your net worth.<\/p>\nIf you\u2019re looking to monitor the progress of your personal finances one way to do so is by tracking your net worth.<\/p>\n
Your net worth is the value of your assets minus your liabilities. It\u2019s a measure of how much wealth you\u2019ve accumulated. While this is not a perfect way to measure financial health it can be a good way for you to continually gauge whether or not you\u2019re making progress.<\/p>\n
If you\u2019ve never calculated your net worth before it\u2019s a fun exercise. Here\u2019s how to do it.<\/p>\n
Calculating your net worth is a very simple process. To start break out a piece of paper or pen or open up a spreadsheet on your computer.<\/p>\n
On one side list out all of your assets. These would be things like the value of your home, the amount of money in your bank account, the amounts in your investing and retirement accounts and the KBB value of your vehicles. \u00a0Tally those up.<\/p>\n
On the other side list all of your debts. These are your liabilities. Include everything that you owe like a mortgage, credit card balances, student loans and any other outstanding loans. Tally those up.<\/p>\n
Now subtract your liabilities from your assets. The number you have left is your net worth.<\/p>\n
(Here\u2019s a list of the average net worth of Americans<\/a> which is shockingly low!)<\/p>\n From now on you can use this number each month to see whether you\u2019ve made progress in building wealth.<\/p>\n Disappointed by your net worth? If so, don\u2019t worry. There are plenty of things you can do to increase your net worth. If you are interested in personal finances there\u2019s a good chance that you\u2019re already doing these things!<\/p>\n Pay Down Debt<\/strong> \u2013 The lower your liabilities the higher your net worth is going to be. If you have high interest debt go ahead and work on getting rid of it. After that you can decide whether or not to focus on paying off other debts early, like student loans or your mortgage, or invest instead.<\/p>\n Save More Money<\/strong> \u2013 More cash in the bank equals more assets. If you don\u2019t have any high interest debt, save your money!<\/p>\n Related: How I Saved $10,000 on a Low Income<\/a><\/p>\n Invest More Money<\/strong> \u2013 Of course, one of the best ways to grow your money is to invest it. There are plenty of ways to invest but it\u2019s recommended to start with a retirement account and after hitting that goal move on to investing in a personal account.<\/p>\nWays to Increase Your Net Worth<\/h2>\n