Financial Security Step 4 - Calculate your Net Worth - Balanced FI

Financial Security Step 4: Calculate your Net Worth

Calculate your net worth to track your financial progress. Net worth goes up as assets increase and debts decrease.

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If you’re new to the Financial Security Steps, start here: Welcome!

Calculate your net worth to measure your progress toward financial security. Over time, you want your net worth to increase. Once it hits $1 million, you’re officially a millionaire, even if you don’t have that much in cash.

First, download your free Calculate your Net Worth Worksheet

If you want proof that the Financial Security Steps work, look at my family. We’re still paying off debt, but our net worth has increased by over $157,000 since October 1, 2019. That’s due to increased real estate value, good returns on retirement investments, and paying off a lot of debt.

What is net worth?

One of the major indicators of financial security is your net worth. A positive net worth indicates that liquidating all your assets would cover your outstanding liabilities – in English, if you sold your home and car, and cashed out all your savings and investments, you could pay off all your loans.






If your net worth is negative, that means you couldn’t pay off your debts by selling everything. It’s not a great place to be, but it is fixable. You can either increase your assets (by saving more) or decrease your liabilities (by paying down debt). After investing a minimum of 3% in retirement, you should focus your efforts on paying down debt.

Financial Security Step 4 -easily track your net worth - Balanced FI

But how do you actually calculate your net worth?

  1. List all your assets
  2. List all your liabilities
  3. Do the math

Download the Calculate your Net Worth Worksheet

1. List all your assets

Assets are pretty easy to round up – assets are anything you own. This could be property, like a house or car, or “cash,” like a savings account or retirement account. Some businesses have intangible assets (things you can’t see or touch), such as goodwill, patents, and copyrights.

I use the easiest ways to find asset values, even if they’re not the most accurate. Consistency is more important for tracking personal net worth. If your home value is underestimated by $20,000 each month on Zillow, the changes you see in net worth are still meaningful.

Real estate

If you rent, skip this step. Real estate is most likely your home, but it could also be empty land, farmland, a vacation home, or commercial property. I use Zillow each month to input the value of my home.


This category includes any cars or trucks you own, as well as ATVs, UTVs, motorhomes, campers, trailers, etc. You can use NADAguides to estimate the value of property like this.

Bank accounts

Log into your bank account(s) and write down the balance of all your accounts, both savings & checking.

Retirement accounts

Log into any retirement accounts you have to get the current value. Make sure you write down the balance of the account, not just your contributions.

If you have old retirement accounts from past jobs, make sure to include them here too.

Other investment accounts

These are accounts that are not restricted by the IRS like retirement accounts. They’re likely invested in the stock market, treasury bonds, or local bonds, but you could sell the investments at any time without paying a high tax penalty. Log into your brokerage account to record the current balance or use the latest statement.

Other possessions of significant value

I wouldn’t bother including anything reasonably valued at less than $5000. I don’t have anything in this category, but it could be jewelry, collectibles, or artwork.

2. List all your liabilities

Liabilities can be harder to track down – liabilities are anything you owe. Basically, a liability is a loan of any type, including credit cards. If you have an online login for your liability account, it’s easy to get your balance. If you can’t just log in, use Excel or a Google Sheet to keep track of your balance & payment.

As you start listing your liabilities, record their interest rates and minimum payments for use in Step 5, Create your Debt Payoff Plan.


A mortgage is a loan for the purchase of real estate. Unless you paid cash, you have a mortgage on the real estate assets you have listed already.

Vehicle loans

List any loans you have on cars, trucks, trailers, and other recreational vehicles.

Credit cards

You know what a credit card is. Just make sure to get all of your credit cards, including the stupid Victoria’s Secret card you applied for in college & forgot about.

Student loans

List all your student loans, both private and federal.

Personal loans

These can be hard to track down, because there may not be a written loan agreement.

Taxes due

If you have any tax liabilities, you should have received written communications about them. Remember that the IRS will never contact you by phone & any calls you receive are a scam.


A home equity line of credit is like a credit card against the equity of your home.

401(k) loans

If you took a loan against your 401(k), it’s important to pay it down before you leave the job, when you will be required to pay it back quickly.

Medical debt

Contact your medical providers if you need an updated balance for your account. You can usually get a discount for paying in cash, so add negotiating to your “to do” list.

Cell phone

If you purchased your cell phone from your provider and are still making payments on it, this is a liability.

Financial Security Step 4 -easily track your net worth - Balanced FI

Download the Calculate your Net Worth Worksheet

3. Do the Math

Once you have everything written down on the worksheet, you just need to add up the Assets column, add the Liabilities column, and subtract Liabilities from Assets. Pretty easy math!

I track our net worth and debt balances at the beginning of every month. The positive trends motivate both my husband and me. You don’t have to be as dedicated, but I would absolutely calculate your net worth at critical times:

  1. At the beginning of your debt-free journey. You’ll want to see how far you’ve come
  2. At the end of each year (or maybe even every 6 months)
  3. When you’ve paid off all your debt. Compare your net worth to the beginning – I guarantee it’ll be better!


You should track your net worth over time, but it’s important to remember to not freak out when the value of your retirement account or other investments drops.

Note that I said when, not if. That’s because your investments will fluctuate with the stock market. The best response to a drop in the stock market is no reaction, as long as you’re invested in index funds rather than individual stocks. The market will bounce back eventually if you’re patient.

Actually, during a recession is the best time to buy shares of index funds. Your $100 could buy 100 shares at $1 each when the market is low, but only 10 shares when the market is up. When the market goes back up & each share is worth $5, your $100 investment turned into $500 with no additional contribution from you.

BONUS TIP: run your credit report

You can get one free credit report per year from each of the 3 major bureaus by visiting www.annualcreditreport.com. Request your report from all 3 of the bureaus (Experian, TransUnion, and Equifax) this first time, to look for any inconsistencies and to get a complete list of your debts.

Thanks to COVID, all three bureaus are offering free weekly credit reports until April 2021. This is a great time to clean up any issues with your report.

Your credit report will only show liabilities in your name. This is a great way to find any random old liabilities that you forgot about or that have been sent to collections.

You won’t see any asset information or your credit score. If you’re interested, you can get your free credit score from Credit Karma or some credit card accounts. Don’t pay for your credit score.

Going forward, put reminders on your phone – every 4 months, request a credit report from a different bureau to keep an eye on the debt in your name.

Download the Calculate your Net Worth Worksheet

This easy calculation helps you measure your progress!

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