This week will be a simple one. Last week you had a big assignment to create your personal financial binder and this week we’ll be adding the Net Worth Statement to the binder.
I will be sending out a copy of the excel spreadsheet I created to newsletter subscribers so watch your inbox.
There are a couple of guidelines to follow in creating your first Net Worth Statement:
- Don’t go overboard and try to include all your possessions in the first version. You should only include your house, cars, and at most 1-3 of your most valuable possessions. Then, every time you update your statement you can add one or two more items. Over time you’ll have quite a comprehensive record of your possessions.
- The first statement should take you 20-30 minutes to create.
- If you haven’t completed your List of Accounts and List of Debts for your financial binder, please do so first. This will make creating your net worth statement much faster and easier.
- In the screencast I mention three resources for determining the value of your assets:
- Zillow.com for real estate.
- Kelly Blue Book for vehicles.
- Ebay using the “completed listings” search for general possessions.
- Checking accounts
- Savings accounts
- Money Market accounts
- Stocks, bonds, CDs
- Market value of your home
- Major household items
- Market value of other real estate
- Rental property
- Time shares
- Vacation homes
- Market value of cars
- Value of Cash-value life insurance
- 401K accounts
- IRA and Roth IRA accounts
- Lines of credit (HELOCs, etc)
- Auto loans
- Credit card balances
- Student loans
- Other loans
- Owed taxes
There are several advantages to creating and updating a net worth statement.
- Your net worth is a single number that reflects whether you are making progress financially or not.
- Recording a list of your possessions can act as a safety measure if you were to be robbed or have a fire and needed records to get reimbursed for insurance purposes.
- Updating your net worth statement keeps you in tune with your various accounts and amounts in them. It increases your overall financial awareness.
- In recording possesions and their worth you may uncover some assets you can sell for a healthy profit and put those assets to use in a more valuable way.
As always, leave any comments or questions below and I’ll do my best to answer them.
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