Wednesday, 23 January 2013

Financial net worth assessment

Tracking your net worth regularly is an essential part of the financial planning process.  Your net worth is basically the total of all your financial assets minus your financial liabilities – i.e., if you sold all your assets today and repaid all your debts, how much cash would you have in hand.

You can track your net worth on something as simple as a piece of paper or using an online tool or software package.  Personally, I just use a spreadsheet, and add a new column every few months, so that I can track my net worth over time.

To get you started, assets to record could include:
  • Home
  • Investment properties
  • Cash/term deposits
  • Managed funds
  • Shares
  • Superannuation
  • Home contents
  • Car(s)
Liabilities to subtract could include:
  • Mortgage
  • Property loan(s)
  • Margin loan(s)
  • Car loan(s)
  • HECS/student loan(s)
  • Other personal loan(s)
  • Credit card balances
Some good online tools include:

I like to track my net worth including and excluding my home contents and car, as these are depreciating assets.