The Options2Riches List isn’t intended to be presented in any specific order of importance, but in this case, figuring out your net worth is the most important. Like any journey, you can’t get to your destination without knowing where you are. Therefore, building your net worth statement is the first step in building a solid financial plan. Your net worth is simply the sum of everything you own less everything you owe. If you have financial investments, make sure you record the value as of the date you’re making it. I’ve posted a sample of my net worth statement (with modified numbers and categories of course) to help you get started.
|Item||Amount||Rate of Return/Expense|
|Mortgage Payment Account||$3,000||0%|
Here are some things to note
- I don’t carry a credit card balance so I put 0% on my interest rate. If you carry a balance, be sure to include the interest rate you are paying on that card.
- Most people view their home as an investment, but I plan to be in mine for the very foreseeable future, so I won’t be adjusting the price of the house at any point in the near future. If you are planning to sell your house in the near future, and have a fairly accurate appraised value of your home, feel free to adjust.
- All of my investments are financial instruments (stocks, bonds) so I just put 6.5% expected return as that isn’t too far off from the historical return of these investments.
- I don’t own any investment properties, but don’t forget to add them if you do.
- If you own any alternative assets as investments that don’t have readily available market values such as wine or art, putting down the price you paid is a good place to start.
- You’ll notice I don’t have car on there because I don’t consider my car an asset. I’m a “drive it into the ground” type and eventually it will be $0, but if you’re planning on selling yours, feel free to add in a reasonable value for your car.
Final Thoughts: Knowing where you are is the first step to getting to your destination. Take the time to set up your net worth statement and update it at least once a quarter (I look at it daily) to make sure you’re going in the right direction. Mine is very basic, but it gets the job done. You can go as high level or detailed as you want as long as the finished product gives you an accurate view of what your financial picture looks like. You can do the ol’ pen and paper method, or there are plenty of Excel templates online you can download, and they are all good as long as it works for you. I’ve mentioned before that I think about money all the time so that I never have to worry about it. This is the tool that helps me do that. Thank you everyone for reading my first real post on my new blog. I will be posting something every Tuesday at 9AM so please check back weekly to add to your toolbox of options to riches! Feel free to reach out to me if you have questions or any topics you would like to see on here.
Have a great day!
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