Net Worth Statements
If you don’t know where you are in the game, how will you know if you are winning or losing?
No matter your income or age, your net worth statement is the best tool you can use to help you make informed decisions about your money and financial strategy. Everyone could benefit from doing net worth statements.
Own your financial future before it owns you.
Your net worth = what you OWN minus what you OWE
It’s the total value of everything you own (including your house, cars, investments, and cash) — minus — all your liabilities (all of your debts).
Your income is NOT your net worth
Remember, just because someone has a high income doesn’t mean they will have a high net worth. There are plenty of high-income earners living paycheck-to-paycheck with lots of debt. There are also plenty who make less than $100,000 a year with high net worths. The solution is not more money. The solution is more financial education. Although more money can help you get where your want to be faster, it will not help if you are not financially educated and disciplined. More money can sometimes lead you to more debt. It’s what you do with your salary that’s important.
A net worth statement will give you a snapshot of where you are financially, and it can help motivate you in your journey.
Your net worth will show:
Where you are.
What needs to be fixed.
How much farther do you need to go.
How Often Should You Do Net Worth Statements?
The choice of how often you choose to do a net worth statement is up to you.
Some do a net worth statement once a year.
Some choose to do one twice a year or every few months.
Others do a net worth statement every month.
Helpful suggestions for your net worth statements
Do NOT include social security or pensions in your net worth, as these are only promises of future income. They are not guaranteed, and they can change at any time. These are not assets and should only be included as a footnote on your net worth statement.
Do NOT include kids’ college savings or other saving for your kids in your net worth statement as this money is not for you, but you should add it as a footnote on your net worth statement.
Do write what you are thankful for on each net worth statement as this can be a fun and great way to look back at older statements and see how far you’ve come, keep you motivated, and remind you of all the things you are grateful for.
Do keep a copy of all accounts and how to access the accounts with your net worth statement in a safe place. This can be very helpful for loved ones if something should happen to you. If needed, they will be able to easily see what you own and what you owe, and be able to take care of accounts accordingly.
Other Tips
Value your home at the price you paid for the house plus improvements. This will help you not be overly inflated in your net worth. The housing market fluctuates both up and down, and it’s hard to predict what the market will be when you sell. Valuing your home at your purchase price will allow you to see your net worth grow by your mortgage going down, not your home's value going up, which might not necessarily be there when you sell.
Find out where you should be: Net Worth By Age (2025 Edition) by The Money Guy Show
Contact me if you have other tips or suggestions about net worth statements.
We are all learning together!