"What Gets Measured Gets Managed"

by Jeff C. Johnson

Preparing a year-end "net worth" statement is a great way to appraise and measure your wealth-building progress.

It's all fairly simple unless you're a Rockefeller. Your financial net worth is your assets minus your liabilities:

Assets - Liabilities = Net Worth


What You Own - What You Owe = Your Financial Wealth

First, make a list of everything you "own" along with the estimated value of each item, total the amounts up, and you have your total assets.

Next, make a list of your debts, loans payable, and balances due on credit cards, etc., total the amounts, and you have your total liabilities (i.e., what you owe).

The final step is to subtract your liabilities from your assets, and you have the amount of your net worth. (This is your financial value and has nothing to do with your value as a person.)

Here is a worksheet from my book Five Financial Foundations that you can download, print, and use to get started accumulating data to calculate your net worth.

I recommend doing this and tracking and comparing your results every six months… January and July seem to me to be good times to do this valuable exercise, but anytime is a good time to get started.