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Tip of the Week: How to Find Out and Track Your Net Worth

Tip of the Week: How to Find Out and Track Your Net Worth

When money is tight and you start feeling down about your financial situation, it’s important to keep the big picture in mind. This can be done by reviewing your net worth. Having this big picture will help you to worry less and allow you to better focus on your goals.

How to Find Out Your Net Worth
Thankfully, your net worth takes more into consideration than just your paycheck. A good definition of net worth is the value of all assets, minus the total of all liabilities. In short, net worth is what you own minus what you owe. Generally speaking, this is why your net worth increases over time, as you'll owe less and less on the debts you pay.

To determine your net worth, start by making a thorough list of what you own and what you owe.

What You Own

  • Home (its current value)
  • Other real estate
  • Automobiles and other vehicles like RVs and ATVs (leased vehicles don’t count)
  • Jewelry and collectibles
  • Household items, like furniture, appliances, etc.
  • Retirement accounts, bonds, stocks, mutual funds
  • Cash value of life insurance
  • The balance of checking and savings accounts
  • Cash

What You Owe

  • Home mortgage principal
  • Other mortgage principal
  • Auto loans
  • Student loans
  • Credit card debt
  • Other loans

Once you have all of these items in order, plug this information into an online net worth calculator.

http://cgi.money.cnn.com/tools/networth/networth.html

http://www.creditcardfinder.com.au/net-worth

How to Track Your Net Worth
Now that you know your net worth, you can use a spreadsheet tool to keep track of its growth--similar to how you keep track of your monthly budget. Here are four ways that tracking your net worth can benefit your financial situation.

  • Financial Progress: We all want to evolve and progress in life, it’s human nature. It's even better when you grow your money and can look back to the month or year previous and see how far you've come.
  • Confidence Builder: Saving an extra $1,000 in your emergency fund or watching your 401K increase due to a bigger contribution will make you feel proud of what you’ve accomplished.
  • Avoid focusing on just assets: If you merely focus on that $200K in assets without also taking into account your $100K in debt, you’re just lying to yourself about where you actually stand financially. It's important to factor both into the calculation.
  • Loans: Your net worth can be a factor if you plan on applying for a loan in the near future.

In the same way that it’s beneficial to keep track of your personal net worth, there are benefits to keeping track of your company’s assets. The average agency needs more than a calculator and a spreadsheet to do this, which is why there are so many enterprise-level accounting solutions on the market.

SMART Services understands that ineffective agency IT is merely another expense. That is why we focus on transforming your agency IT from a liability to a strategic asset. If you are frustrated with the unforeseen nature of your current IT or feel that it is not helping to advance your agency growth, call us at 586 258-0650 to discuss getting the most out of your agency technology.

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