What Are You Worth?

Anyone that knows me very well knows that I'm somewhat of a finance buff. I worked in the banking field for 7 years, and even now it's a bit of a hobby for me. Yes, I have professional backgrounds in both finance and health. Though a strange mix, they are not entirely incompatible. When was the last time you felt completely whole, your best emotional and physical self, when you had pressing financial matters or unpaid bills? How does it affect your feelings of well-being to pay off a debt or take a positive financial step?

Whether you're struggling to get by paycheck to paycheck, debt-free with money in the bank, or anywhere in between, there are simple things you can do to improve your fiscal health. The first thing that can be helpful in framing financial goals and taking the proper steps in order to accomplish those goals is to know your starting point. What is your net worth? What does a current snapshot of your financial life look like? I recommend figuring this annually to help you keep perspective of where you really are and what your short and long-term goals should be.

A simple spreadsheet can do the trick. If you're really not computer literate, a piece of paper and a calculator would work, but it's important to keep it over the years to compare with future figures. I'm sure there are multiple ways you can do this, but this is one simple way. The first column lists Wealth-Building Assets like cash, bank accounts, retirement and investment accounts, and current market values of assets you own that tend to increase in value over time (like real estate). The second column lists any Other Assets like the current market value (if you sold them all today) of all your personal property, furniture, and vehicles (you'll have to estimate much of it). The third column lists all your Liabilities, or debt, including mortgages, vehicle loans, credit card and other unsecured debt, student loans, and anything else you owe. Simply add the items so you have a total for each column. Then list Total Assets (column 1 and 2), Total Liabilities (column 3), and Net Worth (Total Assets minus Total Liabilities).

Every year you can just plug in new columns for your already existing lists and have new totals to work with (without erasing previous amounts). Don't let these numbers distress you. It's not uncommon to even have a negative number for net worth to begin with. The important part is actually knowing where you stand financially so you can improve your situation bit by bit each year. Any amount of saving/investing for the future, paying down debt, or increasing equity will reward you with increased net worth each year, and you'll be well on your way to financial freedom and peace of mind.