Know your net worth

What is it and how do you calculate it?

You can’t get to where you want to go, without having a clear understanding of where you are on your financial journey. Your net worth is a financial snapshot of a point in time. It provides a better understanding of your overall financial health, including insights to your assets and debts. It also helps you to better align with your SMART goals and budget planning for your future financial success.

Calculate your net worth by subtracting your liabilities and debt (what you owe) from your assets (what you own). In other words, assets minus debt equals net worth.

Assets: what you own

Assets are the things you own outright. Some examples of assets can include:

• Money in a chequing account

• Savings set aside in a savings account, Tax-Free Savings Account (TFSA), Registered Retirement Savings Plan (RRSP), Registered Education Savings Plan (RESP), etc.

• Car (estimated value)

• House (estimated value)

Avoid including household or personal items like furniture or jewellery – they’re too challenging to calculate and aren’t considered assets.

Liabilities: what you owe

• Credit card debt

• Payday loan

• Loan to a family member

• Car loan

• Bank loan

• Student loan

• Taxes

• Mortgage

• Line of credit (can be unsecured or secured)

NOTE: Keep in mind that your income (how much you make at work or from benefits) doesn’t count as part of your net worth, and neither do your expenses.

Example net worth chart

The benefit of calculating net worth

Calculating your net worth on a regular basis is an active way for you to stay focused on your goals. Whatever your net worth statement is, it says nothing about you as a person. It’s just a number that lets you know what actions to take for a healthy financial future.

Key takeaways: how to calculate your own net worth

1. Make a list of all your assets and liabilities.

2. Use the sample net worth chart above to calculate your net worth statement.

3. Once you’ve calculated your net worth, take a minute to reflect and write down two insights you learned from this exercise. Something like “I have too many credit cards that I owe money on” is an example of an insight.

Words of encouragement: understand the big picture

You might find this exercise challenging or uncomfortable, but it will ultimately serve a greater purpose. The insights you gain can help you plan and improve your long-term financial health and well-being. You can do this!