How to calculate your net worth
Your net worth is the financial value of everything you own — it's something we should all know, yet tend to overlook.
As Business Insider's Sarah Schmalbruch writes,
A negative net worth — when you've spent more than you've earned — can be the wake up call you need to make some serious financial adjustments. A positive net worth, on the other hand — when you've earned more than you've spent — can be a confirmation that you're doing well, and can help you plot out how much longer you need to reach your next financial goals.
How exactly do you determine your net worth?
Certified financial planner Sophia Bera provides a simple equation in her book, "What You Should Have Learned About Money, But Never Did":
Your net worth = what you have — what you owe
Here's the exact method she uses:
I have a spreadsheet that I pull up, I log into my accounts online, and I enter the balance of each of my retirement accounts, savings, investments, and so on. Then I enter any debts and subtract this number from my assets to determine my net worth.
If you own a home you can pull the approximate value of your house on Zillow.com, and then subtract your mortgage balance to determine how much home equity you have.
How often should you revisit your net worth? Twice a year, Bera suggests.