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Net Worth Calculator Worksheet
Imagine having a good financial standing even amid the present pandemic/post-pandemic economic impact. Or, imagine having a great financial traceable record that you can use to secure a loan or a sponsorship. Now, this is where most people get it wrong. Most people believe that only the elites should have a net worth.
On the face of it, every working-class individual should know their net worth. And, the good news is that with a free net worth calculator worksheet, you can calculate your net worth without a hassle.
So, keep reading to discover the benefits of calculating net worth, what a net worth calculator is, and how to use it.
What is Net Worth?
Net worth is the total of assets; rights that a company or individual owns at a given time after liabilities have been deducted. It is calculated by adding the capital, reserves, and results of the current year.
Net worth is one of the first accounting elements that we must pay attention to in order to understand the value of a company. The assets must have an estimable economic value and the company must have managed to finance them through its resources.
Usually, a time point is taken, such as the end of the financial year, to have a stable reference for its calculation and to be able to offer an image of the financial status of the company.
An individual’s net worth is his or her total asset minus his or her total liability. When the asset value is greater than the liability, the result is positive net worth. On the other hand, negative net worth is achieved when the liability value is greater than the asset.
If you are not sure what your assets and liabilities are, you may want to consider reading the next paragraph to learn more.
Free Net Worth Calculator Spreadsheet
The free net worth calculator spreadsheet below is compatible with both Excel and Google Sheets. Just enter your financial information into the specified tabs and it will automatically do the math for you.
Free Excel Net Worth Calculator
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6 Benefits of Calculating Your Net worth Using the Net Worth Calculator
What’s the importance of calculating your net worth? There are six known benefits:
- A benchmark for measuring success
To measure household success, your net worth comes in handy. It does a pretty good job of helping you figure out your financial standing with your family’s needs.
- Helps in goal setting
Knowing your net worth will help you set long and short-term goals and assist you in planning and evaluating your finances.
- Helps secure loans
The bitter truth is that no loan agency will be willing to give you a loan without first knowing your net worth. The fact is, they would review your financial statement to see if you’re eligible for the loan. But there’s more. When you know your net worth, you can quickly determine which loan is best for you alongside the incremental fees.
- Helps build assets
It sounds funny, but it’s the truth. You can leverage your net worth to accumulate more assets through investments like stocks. Although stocks seem to be volatile year in and year out, it is still a great way to increase your investment in a low-cost index fund.
- Gives you security
Ask a financially secure person what it feels like to have financial security, and they will tell you it’s one of the best feelings in life. You don’t have to worry about money, but instead live the comfortable life you’ve always dreamed of.
- Helps with financial planning
Financial planning is the key to a financially stable life, and that includes a balance between spending, saving, and investment. The basis of your net worth is to help you make logical decisions in your finances alongside setting long-term and short-term goals.
- Helps figure out a bad debt from a good debt
This is the point many people are missing. A debt is considered a bad debt if your debt is more than 40% of your gross income. Also, debt is bad if it has a high-interest rate. Don’t forget that excess debt can make a good debt bad. Try as much as you can to avoid borrowing, because it is easier to borrow money than it is to pay it back.
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What Is A Net Worth Calculator, And How Does It Work?
A net worth calculator focuses on calculating people’s net worth using asset and liabilities factors. Beyond that, it estimates how a net worth can grow over the years.
To calculate a brand’s net worth, we must add the contributions of the partners or shareholders (capital), the profits of previous years undistributed (reserves), and the results of the current year.
To correctly evaluate a brand’s net worth, it is essential to look at it in relation to the other two assets or large accounting blocks: assets and liabilities. So, before we delve into calculating net worth, let’s recall what assets and liabilities are, as well as the basic setup of a balance sheet.
The balance sheet is a very useful tool for any efficient manager. It offers a picture of the economic and financial structure at a specific moment in the life of the company — usually at the beginning and end of the financial year.
Within the balance sheet, we find three major assets: assets, liabilities, and equity. Let’s see briefly what information each of these groups of accounting accounts collects:
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These are the properties and rights that the company or individual owns at a given time; those from which it can generate value and resources. Assets are differentiated between current and non-current based on their ability to be converted into cash. Assets are your valuable possessions.
For a better understanding, here’s a list of items considered as assets.
- Your land: Land is a long-term asset and the least liquid asset you can own. On a business sheet, land is categorized as a fixed asset. As land does not depreciate, it appears first under the balance sheet heading of property.
- Your car: There seems to be a major controversy about whether to categorize a car as an asset or a liability. The good news is that you can make your car an asset by using it for ride-sharing services like Uber. But don’t forget, it would be categorized as a depreciating asset.
- Your pieces of jewelry: Pieces of jewelry are good investments and have become common assets in the modern age. Yes, jewelry prices may fluctuate widely, but their value does not seem to depreciate significantly. Don’t get it wrong. When we talk about pieces of jewelry assets, this points to gold pieces of jewelry, diamonds, gemstones, sapphire, and other precious stones of value.
- Your furniture: When furniture is in a good condition, it is an asset on a business sheet. This category covers valuable chairs, bookcases, cabinets, etc.
- Your business interests: With business interest as an asset, it is pointing towards every prepaid business interest. An interest not yet paid does not fall in this category. You must understand the difference.
- Cash value: Cash held in safe deposit boxes, savings accounts, and checking accounts are assets that are available to an individual. Another point of consideration for cash value is the cash amount an individual gets upon the cancellation of their insurance policy.
Liability is the total amount of debts you are responsible for. They include, but are not limited to:
- Loans: These include business loans, personal loans, taxes, students loans, and all debts owned by an individual. Loans are to be repaid hence they are recorded on the right side of the business sheet.
- Mortgages: When you borrow money from a bank to buy a home, it becomes a liability. And if you are unable to repay your debt, you end up losing your home.
- Credit card balance: Credit cards are liabilities, however, you can manage them to be short-term liabilities.
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Liabilities are the debts and obligations that the company has contracted to be able to finance the assets it owns at the time the balance sheet is made. The term we have to meet these obligations will determine that we account for them as current or “short-term” liabilities — maturing less than one year — or non-current or “long-term” liabilities — maturing more than one year.
But, here’s something interesting. Sometimes, an item can fall in between an asset and a liability. Let’s take a closer look at this. A car can be both an asset and a liability. What does this mean? When you buy a car, it may take a while to pay off, while at the same time, you own a car, which is an asset.
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How Do I Calculate My Net Worth?
A long time ago, people hired financial agencies to help calculate their net worth. But, nowadays the process has been made easier. With a net worth calculator, you can calculate your net worth without leaving your comfort zone.
All you have to do is use a net worth calculator spreadsheet and add your information to all categories. For best results, update the spreadsheet every quarter to track your investments. Follow the steps below to create a net worth spreadsheet like a pro.
Step 1: Download a spreadsheet program
There are many spreadsheet programs to download from the internet. Although, Microsoft Excel and OpenOffice seem to be the most commonly used spreadsheet programs. Google Sheets is free to use online.
Step 2: Make a list of your assets and liabilities
Keeping in mind the items earlier categorized as assets and liabilities, draft out a list of your assets and debts, including minor ones.
Step 3: Input the data into your spreadsheet
Open your spreadsheet and tab the first call. Under the first cell, input all your assets and do the same in the second cell for your liabilities. But, make sure to skip a line between the assets entries and the liabilities entries for clarity.
Using a net worth calculator to calculate your net worth is easier and faster. And the best part is that it helps you to keep track of all your financial records. With a net worth calculator, you will get to know if your net worth is adding up over time or if it’s decreasing drastically.
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Why Use a Net Worth Calculator?
What are the benefits of using a net worth calculator to calculate your net worth? Net worth calculators are user-friendly and you don’t need to be an expert to know how to operate one. Above all, it is fast and easily accessible. So, you can now say goodbye to the stress of adding up and calculating your net worth manually. The best part? It is free.
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Understand The Different Types of Net Worth Calculators
It’s best to use a net worth calculator worksheet that matches your net worth type.
- Business net worth: In business, the balance is a major tool in determining a business’s net worth. Some people call it the net worth statement. A business net worth is calculated by subtracting the business liabilities from its assets. Many creditors with a negative business net worth find it difficult to relay a loan, and that’s why lenders carefully scrutinize a business’s net worth to determine its ability to pay back loans.
- Personal net worth: A personal net worth is calculated the same way a business net worth is calculated. The difference lies in the different assets and liabilities owned by the individual. Persons having a healthy new worth is termed as a high net worth individual.
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Free Net Worth Calculator Worksheet
The free net worth calculator worksheet below is compatible with both Excel and Google Sheets. Just enter your financial information into the specified tabs and it will automatically do the math for you.
Free Excel Net Worth Calculator
Send download link to:
Should I add a 401(k) when calculating my net worth calculator?
Every retirement account, including IRAs, is an asset and should be included in the net worth calculator worksheet. Don’t make the mistake of excluding your retirement values when calculating your net worth.
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You asked for it, and we have given it to you. Everything you should know about the net worth calculator worksheet, down to its benefits and how to use it. Net worth can help set you on a path of financial stability. And, isn’t that what you want? It’s time to get started with calculating your net worth.
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