Best Net worth Calculator

What is net wealth?

Net worth equals assets less liabilities. Or you could think of your net worth as everything that you own less everything that you owe. You can calculate your net worth using our net value calculator.

How do I calculate my net worth?

When calculating your net worth, it is important to keep track of everything you have and all outstanding debt. If we say “own”, then we include assets you may still need to purchase, such as a house or car.

Consider this example: If your house has a value of $200,000, and your loan balance totals $150,000, you can increase your net worth to $50,000.

The formula is simple:

ASSETS – LIABILITIES = NET WORTH

You income is not included when calculating your net wealth. One person could make a great living but have low net worth if they only spend a small portion of their income. People with low incomes, however, can still accumulate significant wealth and high net worth by investing in appreciation assets and being prudent savers.

Does your net worth calculation include a deduction for a 401(k).

All your retirement accounts are included in your net worth calculation. This includes 401ks as well as IRAs.

What are assets and liability?

Here are some guidelines if you are unsure about your assets or liabilities:

Assets: Assets include cash — such as in your checking, savings and retirement accounts — and items such as cars, property and investments that you could sell for cash. These are often called liquid assets.

If you’re able or willing to sell fixed assets, they can be added to your net value calculation. If you can sell or make use of your home for home equity, then it will count towards your net wealth.

What is Tangible Value?

Your tangible networth is similar to your net wealth in that it adds up all your assets and liabilities. But, it goes one more step. It subtracts all intangible assets like goodwill and patents.

For example, businesses use tangible net value to calculate the liquidation price of a company if they are to close down operations or sell. Personal or small business loan applicants may need to have a real net worth figure. Your tangible networth may be an important factor for your lender. It provides a more detailed view of your finances. The lender will also want to know how much it can recover if your assets are sold.

Tangible Versus Intangible Assets

The difference between net wealth and tangible networth calculations is that the former includes all assets while the latter subtracts those assets that you can physically touch. Assets include everything you own that can be exchanged for cash. These assets can include cash, investments or permanent structures such as homes and land. Personal property includes everything else you own like cars, boats or furniture. These are your tangible items: All things you can own. Investments are financial assets. Because they can be converted into money, investments are often placed in the physical category for such purposes.

On the other side, intangible assets can be assets that are not tangible. Goodwill, copyrights, patents, trademarks and intellectual property are all considered intangible assets since they cannot be seen or touched even though they are valuable. These intangibles can add value to your small-business if you decide to sell it. However, banks may not consider tangible assets when determining tangible net value as part of the loan process. This is because they might be easier to liquidate.

Calculating Your Tangible net Worth

The formula to calculate your net tangible value is very simple.

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There are many steps involved in calculating your net worth. Before you start, decide whether you want to calculate your networth individually (you), or jointly (you/your spouse/partner). Make sure you have all your financial information (bank statements, credit card statements, etc.) in one place.

The process of calculating your net worth the first time will be the most difficult. However, once you determine the methodology and how your assets are valued, it will likely take less time. Here’s the step-by-step process.

Calculating Assets

First, determine the true value of your assets. Begin by determining the assets that are most liquid.

Certificates of deposit

Savings and checking

Money market accounts

Physical cash

Treasury bills

Next, consider investing and determining their current market price. These include:

Annuities

Bonds

Cash value of life insurance

Mutual funds

Pensions

Retirement plans–IRA, 401(k), 403(b)

Stocks

Other investments

Next are real and personal properties–tangible assets. Real property is land and any permanent attachment to it such as a house. Personal property encompasses everything else. These are the items that you should include:

Collectibles–antiques, art, coins, etc.

Home furnishings

Technology for your home

Jewellery

Primary residence

Property rentals

Vacation or second residence

Vehicles: vehicles include cars, boats, and motorbikes

Add all your cash/cash alternatives, investments, real/personal assets to get the total. This sum represents your total assets.

Calculating Liabilities

It is relatively simple to determine your liabilities because they represent all outstanding debts. You likely receive monthly statements and reminders about them. These statements are based upon actual numbers and not estimates. They show exactly what you owe.

Start with the amount of secured debt you owe, including:

Car loan(s)

Home equity loan

Margin loans

Mortgage

Rental real estate mortgage

Second mortgage

Vacation/second-home mortgage

You can then move on to the amount of unsecured debts you owe, including:

Credit card debt

Medical bills

Personal loans

Student loans

Other debts and outstanding accounts

Add secured debts to unsecured debts. The sum represents your total liabilities.

Spreadsheet on Net Worth

Once you have determined your total assets and liabilities, the formula Tangible NW = Total Assets – Liabilities – Intangible Assets can be used to calculate your tangible net.

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By Michael Caine

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