Many of my fellow bloggers draw up their net worth statements and update us regularly on their progress. While checking your net worth every month is probably overkill, it is a valuable exercise to go through once every year, preferably on a particular date (personally, we do this on December 31st).
The net worth statement is a fairly simple document. You simply list all your assets (bank accounts, investments, RRSPs, cars, real estate etc.) and subtract all your liabilities (loans, credit card balances, mortgage etc.). It is important to note down the current value of your assets, so don’t forget to depreciate your car’s value and conservatively estimate your home’s current value.
Like some other financial topics (RRSP vs. mortgage, nest egg vs. cash flow), the assets that should be included in the net worth statement are a source of endless debate. I think that you should add everything that you are reasonably sure could be converted to cash (at a minimum your autos and your house). In drawing up our net worth, I do not include household articles, but you might have valuable antiques or jewellery that could be included.
Your current net worth statement gives you a snapshot of how you stand financially. And, as you track your net worth for a few years, it gives you a good idea of how well you are progressing toward your financial goals.
