Stacks of coins next to a glass jar filled with coins.

How are you determining the state of your finances?  By the house you live in or the car you drive? By the amount of your income?  Did you know none of those things are a good indicator of wealth? The true indicator of wealth is your net worth.  Don’t worry if you don’t know how to determine your net worth. Let’s dive into how to calculate and track your net worth and *spoiler alert* I have a free net worth tracker for you to download too.

Why You Should Track Your Net Worth

Net worth gives you a clear picture of your current financial situation.  Additionally, consistently tracking your net worth will provide you with a solid measurement of your progress on the path to financial freedom.

Are you currently working to improve your finances in some way?  Maybe you’ve had a rock-bottom moment and decided it was time to make a change, financially speaking.  

Visual trackers are a great way to keep yourself moving while on a debt-free journey.  Another great practice that can be highly motivating is tracking your net worth. This one specific number is a great indicator of how your finances are changing and growing over time. 

Tracking your net worth on a monthly or quarterly basis can also help you understand how your financial systems are performing for you and help you revise your strategies based on your current financial goals.

What Does Net Worth Mean?

As mentioned above, net worth is essentially the difference between your assets and liabilities (money you owe).  Each financial decision you make will effectively impact your net worth – either positively or negatively.  

It’s a common misperception that just because you are in debt you have a negative net worth.  While that may ring true in many situations, it completely depends on the number of assets you have.  

Personally, we have a positive net worth – despite our {almost} $200k mortgage – due to our retirement assets.  So, your net worth provides you with a complete picture of your finances as a whole instead of a narrow view, which may focus on just one part of the pie. 

Simply put, if your assets are greater than your liabilities you have a positive net worth.  If they are not then your net worth is negative.

How to Determine Your Net Worth

While it may sound complicated, you can easily determine your net worth in just a few quick steps.

READ MORE: 9 Creative Ways to Save Money With Little Effort

List Your Assets

First, make a list of all your assets and their respective values.  Assets will include anything you own that can be sold for money.  

This list can include (but is not limited to): 

  • Cash in bank accounts
  • Any investment accounts
  • Property 
  • Other assets (things worth money)
  • Vehicles (this is up to your discretion since, technically, a vehicle is a depreciating asset so realize this value will continue to fall over time)

List Your Liabilities

This list will include anything you owe money on and can include (but is not limited to): 

  • Credit card balances
  • Home loans or other mortgages
  • Vehicle loans 
  • Student loans 
  • Taxes owed

Grab Your Calculator

To determine your net worth, first, add up your assets.  Next, add up your liabilities and subtract the total from the asset total.  That’s it. You’ve officially calculated your net worth. How simple was that?

After finding our way out of debt and shifting our focus to financial independence, I held off calculating our net worth for a while feeling as if it were an overwhelming topic reserved only for rich people, but I couldn’t have been more wrong. 

Determining our net worth gave us a true starting point and a more reliable way to measure our financial growth over time. 

If you’re in debt, tracking the percent in which your net worth changes each month can also be a valuable metric.  Technically, every payment you make towards your debt is increasing your net worth so tracking this number becomes increasingly exciting over time!

If you’re a spreadsheet junkie (like me nerd emoji) you can download this net worth tracker I created…for free.  This is the same net worth spreadsheet I use for our own personal finances, and it’s worked well for us.

It’s a simple Google spreadsheet I use to track the changes in our net worth from month to month.  When the year is over, make a copy and use it for the following year, or add more columns if you’d like to contain it all to one sheet.  

Send me a copy of my free net worth tracker

How to Use Your Free Net Worth Tracker Spreadsheet

The calculations are set up in the C + P Net Worth Tracker for you, so most of the work is already done for you.  The net worth tracker is already formatted to track each month of the year but feel free to change the column headers to reflect the timeframe you want to track. 

To update your net worth, adjust the amount of each asset and each liability.  Your net worth will calculate automatically as will the percent change. (see included instructions for additional help)

READ MORE: Budget Better in 2023 With A Budget Binder

Increase Net Worth

Now that we’ve covered all the details on how to track and determine your net worth, let’s chat a bit about what to do if you’ve taken all the steps above and your number is, well, let’s just say… less than desirable.

Increasing your net worth is simple.  Simple? Yep, for sure. But is it easy?  Not exactly.

Increasing your net worth is simple because it’s just a matter of increasing your assets and decreasing your liabilities.  

But that doesn’t necessarily mean it will be easy.  

stacks of coins with hand and text that reads increase net worth free tracker

How to Grow Your Net Worth

Save More Money

Saving more money will allow you to grow your assets by increasing the balance in your savings accounts, investment accounts, and sinking funds.  

Learning to live more frugally, living below your means, and spending less than you make will all help you increase your savings amount!

Pay Off Debt

Remember, debt is a liability, so being in debt will negatively affect your net worth.  Every dollar paid towards your debt will decrease the number of your liabilities, therefore increasing your net worth.

Aim to pay off all debt using this proven system that helped us pay off $54,500 of debt in only 20 months.

Increase Your Income

Whether you’re putting in overtime at your day job or earning some money in the margins of your day using these awesome money-making apps, working hard to increase your income is going to greatly impact your bottom line.

Use the extra income to save, invest or pay down debt, but one important thing to remember is to keep your expenses under control. 

If your expenses begin to increase at the same rate as your income your net worth will not grow, the key is to keep your expenses the same (or less) as your income grows!

Grow Your Assets

Paying yourself first by automating your savings or investments will help you grow your assets even more quickly.

Often we have the best intentions to pay all our bills and save what is left; unfortunately, that doesn’t always work in our favor.  Many times you will find there is nothing left at the end of the month to save.  Make saving the first line in your budget and watch your net worth rise.

Kristin Stones is the owner of Cents + Purpose, an online community dedicated to sharing practical personal finance content. Her mission is to equip women with the necessary tools and knowledge to take back control of their money and live a more purposeful life. She creates actionable content to help her audience achieve financial wellness using her simple approach to managing money - all learned through her personal experience of paying off almost $55,000 of debt in under two years.

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