Working Out Your Net Worth.

Moving on from the 4% rule which we discussed last week and following on from the newsletter which came out on Friday (are you signed up?), let’s get into it.

What is my net worth?

Your net worth is a measure of your overall financial health - not the only measure, maybe not the most important measure but probably more than an indicator as it functions as both a barometer and potentially a goal setter.

It’s a simple thing to work out but it may take a bit of time to dig it all out. The basic formula is:

What you own - What you owe.

You work out the total of what you owe and then subtract that from the total of what you own and it leaves you with your net worth figure.

That might be more or less than you expected or wanted it to be, it might even be a minus figure and it might go up or down over time too. As with most situations like this where the instinct might be to look away (because it’s scary, stressful, complex or boring….) - the facts are already there, you already have a net worth even if you don’t know it, not knowing it doesn’t mean it doesn’t exist or have an effect on your financial health.

Once you do have the knowledge though, then you’re in the driving seat.

What You Own

Find out and write down the value of your:

• Current accounts.

• Actual cash stashed anywhere.

• Savings accounts, including:

  • General savings accounts and savings bonds.

  • NS&I products like British Savings Bonds and Premium Bonds.

• Investment accounts, including:

  • Stocks and shares ISA’s.

  • Pensions.

  • Index funds.

  • Crypto currency.

  • Individual stocks, shares, bonds and gilts.

  • Cash value of a life insurance policy.

• Pensions, including:

  • Workplace pensions.

  • Personal pensions.

• Property, including:

  • Your home.

  • Second homes here and abroad.

  • Buy to lets.

  • Commercial property.

  • Property funds if you haven’t included them in the investments above.

• High value property at resale value, including:

  • Cars, art, jewellery, collectibles.

• Business assets, including:

  • Shares in a business you own.

  • Loans owed to you.

• And then anything else you can think of because life is wild and I can’t cover everything!

What You Owe

Find out and write down the value of your:

• Mortgages, including:

  • Your home.

  • Second homes here or abroad.

  • Buy to let.

  • Commercial properties (if it’s in your name and not a company).

• Loans and credit, including:

  • Credit cards.

  • Personal loans.

  • Student loans.

  • Finance agreements for cars or furniture including hire purchase.

  • Overdrafts.

  • Store cards, Klarna, or other buy now and pay later accounts.

• Legal obligations, including:

  • Outstanding taxes.

  • Child maintenance.

  • Fines and settlements.

• And anything else you can think of like loans to family and friends.

Then do the simple take away sum and you’ve got your net worth!

You can do this on a spreadsheet like Excel or Google Docs which is great because it looks neat, it’s adjustable without scribbling things out, it can add stuff up automatically, you can create a copy and keep an eye on how things are progressing.

However, I like good old pen and paper. I’ve got mine in my bullet journal but just as just a regular page. Nothing fancy, no beginning of the year stuff, not perfect, just an every day gal keeping a track of her own finances.

What do you think? Will you do it? Can you see the value?

Love Eleanor. xxx