Calculating Your Net Worth

THE first step toward taking control of your personal financial life is to calculate your net worth. That is what you own minus what you owe. Once you figure out what you are worth, you can set your goals for example, to take a vacation, buy a house or secure a comfortable retirement. Then you can devise strategies to reach those goals.

Your net worth is your financial mirror image what you look like on a given day. Anyone with a simple pocket calculator can figure net worth. Add up the current value of all your assets. Start with your checking and savings accounts and money market funds. Don't forget the current market value of any stocks, bonds or other securities you may own. Your insurance agent can supply the current cash value of your life insurance if it is not in the policy. To find out what your house or condo is worth, consult a real estate broker or note the asking prices of similar homes for sale in your neighborhood.

When adding up, do not overlook the current worth of your employee benefits, such as profit sharing and thrift programs and unexercised stock options. Often these assets are second in value only to your house.

If you own some art, antiques, jewelry or other collectibles, you may need to call in an appraiser to give a good estimate of their current resale price. No matter what kind of collectible you have, you can expect to pay an appraiser an hourly fee of $ 100 to $300. If you do not have many collectibles, you do not need an appraiser. just ask a knowing dealer what he thinks you could sell them for. But remember: Your possessions are worth what you could get if you had to sell them immediately not what it costs to replace them.

You should recalculate your net worth at least once a year. Some debt counselors urge their clients to take their financial reading immediately before they start Christmas shopping. But if you have never drawn up a personal balance sheet or yours is as old as a 6% fixed rate mortgage, the best time to start is now. You might discover that you are better off than you thought.