How to calculate your net worth?

M. asks: When you are talking about net worth do you count everything you can sell and get money for? Paid off cars, jewelry, any collectibles?


According to the most used definition, the net worth is the value of all the non-financial and financial assets owned minus the value of all its outstanding liabilities.

But practically, in case if you get in trouble and you have to sell your assets, you will not just sell everything you own. Some items like collectibles are not easy to sell. And there will still be some items you will have to keep like your car or your house.

For items like car, house, jewelry and other personal items I would only count the net liquidation amount.
That means, that for the house I would take the amount it will sell for in the current market minus realtor fees. 
For the collectibles and jewelry - only that what you can sell it for. Collectibles are sometimes difficult to sell, the jewelry might be worth less then it was bought for.

Knowing and tracking your net worth is useful. It will make you aware of your financial situation and it gives you a reference point for measuring progress.  


How to create your personal net worth statement

List all your assets:
1. Cash in bank accounts
2. Retirement savings (tax-deferred accounts)
3. Investments (taxed accounts)
4. Cash value of insurance policies
5. Personal property (if there is any high value property like art, or jewelry or precious metals bars or coins)
6. Car value
7. Value of your house
For the last three I would use the current sell value.

List all your liabilities:
1. Mortgage
2. Car loan
3. Student loans
4. Other personal loans like credit card balances

Subtract the liabilities from the assets. The number you get is your net worth. You can update it monthly and hopefully enjoy to see how your liabilities are melting and your assets are growing.


After you got that, you might be interested to see how you rank among your fellow Americans.
Here is the link to the Net Worth By Age Calculator for the United States which will show you where you stand compared to your age group.

Here are two more interesting calculators:
Income Percentile by Age Calculator for 2017, United States and Net Worth Percentile Calculator for the United States in 2017.