Money Matters with Nimi
Calculating your net worth: Your net worth is a snap shot of what you own, your assets, less the debt that you owe; your liabilities. Your net worth gives you a true picture of what you actually own and is one of the most accurate measures of your financial progress.
It can be a useful tool with which to track your progress year on year. Calculating your net worth is a fairly straightforward process. Before you embark on this exercise, get yourself organized and gather all your financial documentation; your bank statements, investment advices, receipts and soon. Here are some simple steps to help you to calculate your net worth.
List your major assets; Get a realistic value of your car, your home and any other property you might own. It is best to be conservative in your estimates so that you do not distort the true picture of your net worth.
Particularly during a major recession, real estate is not easily marketable so you must be realistic in your estimates.
List other assets such as cash, bank accounts, certificates of deposit, stocks, bonds, mutual funds, retirement savings and life insurance policies that have accumulated cash value.
Do you have any valuable personal effects such as jewelry, an expensive wristwatch, a musical instrument, some special furniture or valuable artwork, a serious coin or stamp collection or any family heirlooms? Don’t list everything, just things of significant value. Be sure to list the market value of your assets as their real value is only what the market is prepared to pay for them and not what
you would like the value to be.
Add all the assets that you have listed to get your total asset figure. This information is also very useful in ensuring that you have adequate insurance coverage.
Now list your personal liabilities or what you owe such as your mortgage, car loan, outstanding debt on your credit cards and any other debt.
Add up all your liabilities to come up with a total.
Subtract this total from your total assets and there you will have your net worth. A negative figure should jolt you into making necessary changes in your financial situation.
Try to go through this process at least once a year and track your progress. Ideally, you should have a steadily increasing net worth

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2 Responses to “N is for Net worth”

  1. ABDUL ADENIJI says:

    Very enlightening.

  2. adaeze says:

    Please ma, is there a way to calculate intellectual worth, knowledge or skill through which a person earns some income. Or does this not include one’s assets? To be more specific, I have an 8-5pm job and I also sew clothes for people. Is it possible to put a price tag on this?
    Thank you.

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