How To Calculate Your Net Worth? Detail

Your net worth represents the relationship between the decisions you make about your assets and the decisions that affect your liabilities (debts).
As the way you manage your money changes, so will this relationship. Learning how to calculate your net worth can give you a better idea of where you stand and can guide you toward a brighter financial future.
What is net worth?
Net worth is simply a personal balance sheet; the difference created when you subtract liabilities from assets.
In other words, what you own minus your debt.
The latest figures released by the Office for National Statistics (ONS) in June 2020 show that the median net worth of UK households between April 2016 and March 2018 was £356,400.
Every step you take on your financial journey should ultimately be aimed at increasing your wealth and reducing your debt. Tracking your net worth can help you achieve this by helping you keep track of where your money is going.
“Following it can give you a good sense of whether you’re heading in the right direction and growing your net worth,” says Crystal Rau, CFP, MBA, and founder of Beyond Balanced Financial.
Calculate Net Worth
In order to calculate your assets and liabilities to determine your net worth, you must be willing to do some research. More importantly, you need to be honest with yourself about where your money is going.
How to Calculate Net Worth
First, look at your wealth. Your possessions, savings accounts, checking accounts, ISAs, and all stocks and bonds should be covered.
Does net worth include pension?
Even if you don’t receive your pension until retirement, it is included in your net worth. Since many of us change jobs on a regular basis, this may mean you’ve built up several small pension pots instead of one big one.
Fortunately, the government’s superannuation locator service can help you find missing superannuation so you can add them to your list.
When calculating your total wealth, it’s important not to just consider the obvious. Don’t forget your less obvious items too. Many people often forget to include things like “cars, furniture, collectibles, and life insurance surrender values,” Rau said.
You can use online sources such as Zoopla to find out what your property is worth now, Autotrader for your car and eBay for your items to estimate the value determination of your furniture, jewelry and other household items.
Next, calculate your liabilities. It means everything. It’s important to keep track of all your debts, from mortgages to credit card debt, student loans, auto loans, and personal loans. Don’t forget to consider accrued interest as well.
When you add up all your assets and liabilities, this is your current net worth!
Net worth calculator
Alternatively, you can enter your numbers into a tool like the Bankrate Net Worth Calculator, which also estimates your net worth over the next ten years.
How to use your wealth
Use your newfound knowledge as a tool in your financial arsenal.
While credit scores and savings can give you a glimpse of part of your overall outlook, your net worth can tell the whole story about where you put your money down.
“A growing net worth shows that you’re making smart financial decisions,” says Law. “Decisions such as saving some of your salary, investing more, or paying off debt will boost your net worth. On the other hand, mounting credit card debt, depreciation of assets, and expenses you earn can drag down your net worth.”
If your assets and liabilities aren’t exactly what you expected, knowing the details can help you create an action plan for spending and budgeting.
Use your total wealth as motivation to do better. If you find that your total worth is reaching your goals, stick to your habits or find ways to keep your net worth growing.