by Starla Ross

Created on: November 19, 2009   Last Updated: November 26, 2009

Many families think net worth statements are only for large corporations and businesses. The thought of creating one can seem unimportant or unnecessary, but this couldn't be further from the truth.

A net worth statement is a snapshot of your finances. It simply tells you exactly where your finances are at any one time, and it can also tell you if you're meeting your financial goals.

Figuring your net worth doesn't need to be complicated. In fact, you can probably create your first net worth statement in less than an hour if you know where to find your financial papers. That's less time than it takes to watch a television show or run out for a pizza, and the results will be much more beneficial.

You can create a simple net worth statement on any spreadsheet program, such as Excel. If you don't have a spreadsheet program, you can use a word processing program or even plain old paper (lined ledger paper works best, but any paper will do).

Your net worth is everything you own (your assets) minus everything you owe (your liabilities). Don't let those words scare you away from figuring your net worth. It may sound complicated if you're not accustomed to working with your assets and liabilities, but it's not - assets and liabilities are just fancy accounting words for what you own and owe.

Begin by listing the word "Assets" at the top of the report. Underneath, list everything you own that has value. If you can sell it, it's an asset. This column also includes any retirement savings or investments you may have. Total the amount of your assets. Your assets column will look something like this:

ASSETS

House, 124 Main Street $220,000
Retirement Account 14,000
2001 Range Rover 7,000
2006 Toyota Camry 13,000
Checking Account 1,000
Savings Account 3,000
Furniture 500
Jewelry 300

TOTAL ASSETS $258,800

Next, it's time to figure your liabilities. Remember this is everything you owe - whether it be to other people or a bank. Put the word "Liabilities" and then begin listing your debts underneath. Find the total of your liabilities. Your liabilities column will look something like this:


LIABILITIES

House Mortgage Balance, 124 Main Street $203,000
Auto Loan #1, 2001 Range Rover 2,500
Auto Loan #2, 2006 Toyota Camry 9,500
Loan to Aunt Susie 500
Visa Credit Card 300
Mastercard 1,200
Medical Bills, Smith Hospital 600

TOTAL LIABILITIES $217,600

Lastly, you'll want to subtract your liabilities from your assets to show your total net worth. Your entire net worth statement will look like this:

ASSETS

House,

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