A net worth statement is a zoomed-out view of your financial picture as a whole. It shows you everything you own and owe on a single page.
And it serves as a tool to help you understand where you are today to make more intentional financial decisions for your future.
You start by adding up all of your assets. All of your savings and investments, your house, your vehicles etc. Essentially, anything you own that has value.
Then, you add up all of your liabilities, like your outstanding mortgage, car loans and credit card debt.
Your net worth is the difference between the two.
It’s a good idea to review your net worth annually and compare your progress. It can provide you with valuable information about the areas of your finances that need attention and motivate you to continue working on your progress.
I will mention, descending net worth isn’t inherently bad. There can be many big-ticket expenses during the earlier stages of life, like paying for education, buying your first house or having kids. Descending net worth is also a natural part of retirement.
Working through any financial workbook, whether your net worth or cash flow, can be daunting. It’s important to remember that net worth does not equal self-worth. Financial freedom and fulfillment are separate paths. An ascending net worth won’t necessarily make you happier, but taking stock of your net worth will help you gain control of your finances and, with time, increase your financial freedom.
If you want to access Victoria’s net worth workbook, please reach out or find it here. She would be happy to work through it with you.