4 Steps To Calculate Net Worth (Or 1 Quick Cheat)

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4 Steps to Calculate Net Worth or One Quick Cheat2
One of the most beneficial financial moves you can make is to calculate net worth. Net worth is a simple math formula that’s gives snapshot of your financial well-being and serves as a helpful measuring stick for retirement planning. Here’s the formula:

Calculate Net Worth

Not rocket science right?

Though the math is simple, organizing all the numbers can be cumbersome. In today’s world, our money is spread out over many bank accounts, brokerages, phone apps, and credit facilities.

Some call that sophistication. Others call it disorganization.

If you are disorganized by nature (or lazy like me), you can skip down to “the cheat”, because it’s the automated way to calculate net worth.

But even the most disorganized money person in the household should understand how to calculate net worth.

To make this easy for everyone, I’ve broken up how to calculate net worth into four easy steps. 

Following these steps will help you understand why net worth is so important.

After that, I’ll reveal the super-easy cheat (that I personally use every single day).

1. Get Organized

OK, I know you’re probably busy with family, hobbies, social life and everything else. But the first step is to set aside some time to get organized with your financial self!

Find everything in your life that is finance related. Write them all down in one place or create a simple spreadsheet with your logins and passwords. Do this once and you’ll never need to organize again!

If you open a new account in the future, make sure to add it to your list.

2. Calculate Your Assets

Start with your assets (what you own). Locate all of your bank accounts, brokerage statements, retirement accounts, the value of your car (Kelley Blue Book is an easy place to check), the value of your home (I use Redfin), and any significant items of value (engagement right, side business assets, significant collectibles etc.).

Write down the value of each, or put them into a sweet spreadsheet (I take a lot of pride in mine!). Add them up, and that’s what you own. Save this number for Step 4.

3. Calculate Your Liabilities

Next, assemble all the numbers to calculate liabilities (what you owe).

Most of us have debt, and sometimes it helps us build wealth (mortgage is the best for this). 

What’s important is to acknowledge all of it and be aware of all the interest rates.

Part of calculating net worth is understanding exactly what your finances look like. It’s important for estate planning

Gather all of your credit card accounts, debt products (mortgages, home equity lines, etc.), car loans, student loans and any outstanding personal loans.

Add the balances of each debt and to come up with your total liabilities. This is what you owe to others.

4. Calculate Net Worth!

Simply follow the net worth formula. Here it is again:

Calculate Net Worth

Subtract your total liabilities (Step 3) from your total assets (Step 2), and that equals your net worth.

For years, I constructed a complicated net worth spreadsheet and updated it every month. 

Now I use an automation tool which calculates net worth and analyzes my investments daily. 

Now For The Cheat!

So now that you understand how to calculate net worth, it’s time to automate it.

There’s a free tool that calculates your net worth for you. This isn’t an online calculator, where you have to input all of your numbers each time.

This one updates automatically every day, and you only have to set it up once. Best of all, it’s 100% FREE. No-cost, quick, easy, and for you it’s totally math-free.

The tool is called Empower.

Empower allows you to link all of your online accounts into their platform. Both assets and liabilities. Empower then analyzes each and every account calculates your net worth on the fly. So any time you check in from either your computer or phone app, your net worth is calculated in real-time.

I used to calculate my family’s net worth every month on a spreadsheet. Logging into each account took forever. I did this every single month all the way back to 2003.

Now I just log into my Empower account and it’s done for me. That frees up a ton of time that I can now spend with my kids.

Empower also tracks spending to identify places you can improve on your budgeting skills. And it analyzes your investing strategy to see if it can be improved by pointing out high fees on mutual funds and other investments.

I’m a huge fan of Empower and recommend it to my family, friends, and followers of my blog.

It has really simplified my financial life and helps me see the big picture. If you like to optimize you time like me, and want to check out Empower, just click the banner below and sign up.

Helpful and totally free. Calculate net worth the easy way. Automate your wealth.


Favorite tools and investment services right now:

Sure Dividend — A reliable stock newsletter for DIY retirement investors. (review)

Fundrise — Simple real estate and venture capital investing for as little as $10. (review)

NewRetirement — Spreadsheets are insufficient. Get serious about planning for retirement. (review)

M1 Finance — A top online broker for long-term investors and dividend reinvestment. (review)