Net worth goes beyond searching for your favorite artists, musicians, and authors on Google to see how financially liberated they are. Hypothetically speaking, any individual could calculate their own net worth by counting their assets, debts, and liabilities.
But why would you do so? What value does knowing one’s net worth provide? In short, net worth is a practical tool that can help indicate a person’s financial health. This considered, let’s discuss how to calculate your net worth.
What is Net Worth?
Net worth is the value of all of your assets, minus the total of all your liabilities.
Why Is Net Worth Important?
At Centura Wealth Advisory, we unlock your wealth through innovative planning methods to find new pathways and change your wealth trajectory.
Net worth is a key tool in financial planning, especially when it comes to big life events such as mapping out your retirement strategy or purchasing a home or even a business. This figure reveals if your assets are worth more or less than what you owe, and can help predict how your wealth will grow or decrease over the course of your life.
How Do You Calculate Your Net Worth?
Formulaically speaking, calculating one’s net worth shouldn’t be all that difficult.
Again, net worth is the value of all of your assets, minus the total of all your liabilities.
Assets - Liabilities = Net Worth
It should, in theory, be a simple subtraction. However, the tricky part comes in when respectively calculating assets and liabilities.
One’s assets might include but are not limited to, an individual’s liquid and fixed assets, which might include a hodgepodge of:
- Savings accounts
- Checking accounts
- Personal property (Real estate, automobiles, collectibles, jewelry, etc.)
- Investments (annuities, bonds, cash value of life insurance policies, mutual funds, pensions, retirement plans, stocks)
A liability is any sum of money that you owe—whether it be to an institution, person, or bank. One’s liabilities might include, but are not limited to:
- Student debt
- Consumer debt
- Personal loans
- Auto loans
In an effort to make this process easier, we’ve created a free net worth calculator for your use.
The easiest, and most precise way to calculate your net worth, however, is to instead reach out to our team of stewards at Centura Wealth Advisory.
At Centura, we focus on generating excess cash flow to drive long-lasting wealth. Setting up your estate plan with one of our trusted advisors—so your cash flows exceed your standard of living—provides you with what we call Liberated Wealth®.