i'm worth what? how to calculate your net worth (and see how you compare to your peers)

Photo Credit: Roberto Nickson via Unsplash

Photo Credit: Roberto Nickson via Unsplash

I wrote an article a couple of weeks ago about how I had managed to earn a net worth 20x that of the average 30 year old.  Yes, it sounds crazy even to me.  I’m still over here hoping it’s not a dream.   

However, while I let you in on the secret to get you there (if you missed the article, read it here), I didn’t give you the means to see where you stand right now.  Rude of me, right? It’s hard to figure out a strategy to get to your financial goals if you have no idea where you’re starting from, and now it’s my chance to help you do just that. 

Before we get started, though, I do want to say this: you shouldn’t compare your financial situation with mine…or anyone else’s for that matter.  I was lucky enough to graduate college debt free (more on that in a separate post this fall) and land a pretty decent paying job straight out of school.  Plus, I rent out a room in my home, which nets me an extra $5K-6K every year. Many people didn’t or don’t get those opportunities, so don’t beat yourself over the head if you are nowhere near that amount.  It’s ok.  We’re all on our own paths and the only person you should be in competition with (or compare yourself to) is yourself.  Got it? Good – now download my net worth calculator below and let’s get started.

Britt's Basic Net Worth Calculator

HOW TO CALCULATEYOUR NET WORTH

Ready for the easiest math you’ve ever done?

First, a disclaimer: I created the spreadsheet so that you could calculate your net worth every month if you'd like, mainly because I'm an excessive Type A and do just that.  However, you'd be fine with just calculating this figure every 6 months or so.  Comprende, amigos? Alright, good. Back at it.

Simply put, your net worth is what you own (assets) minus what you owe (liabilities).  To start, you’ll want to list out everything you own and place a value to it.  I’ve listed a lot of the big contenders for you already (i.e. bank account, savings, etc.), but you may need to add some lines based on your personal situation.  Some of these things may be easy to value – your checking account, savings, investments.  The value of others, like your house or car or electronics, may be harder to calculate or need to be estimated.  For instance, I use Kelly Blue Book to estimate the value of my car and chose to list my home’s worth as what I bought it for 3 years ago (yep, went conservative).  Once you’ve got all those listed and a value assigned, you’re done with step 1.  Piece. Of. Cake.

Next is to list out everything you owe.  This would be things like your mortgage, student loans, credit card debt, the $1,000 you loaned from your parents…you get the picture.  If for some reason you don’t know the exact current balance, you can use my loan amortization calculator to figure it out (find it here).   There.  Step 2 complete.  Have a second slice.

The only thing left to do is subtract your liabilities from your assets, and give yourself a high five because you’ve just calculated your net worth.  Feels like 1st grade math again, right?  That’s because it is.  

 WHERE DO YOU STACK UP AGAINST YOUR PEERS?

The moment of truth:  now that you know your net worth, how do you compare to others your age? The following chart[1] lists net worth by age within the 30th, 50th, and 70th percentiles.   Take a peek and see where you stand in regards to the average for your age group.   

networthbyage

If you’re under 35 and have a net worth greater than $6,700, congrats – you’re beating the average.  However, if you’re under that threshold or your net worth isn’t exactly where you want it to be, that’s ok – you’re in the majority here.  For many of us under 35, the main goal is to just pay off all of our debt and get our net worth to zero.  So even if you aren’t at that $6,700 mark, don’t fret. It doesn’t mean you aren’t going to be financially stable later in life. You can still kill it as long as you make a plan and do that work.

Now that you know where you stand, you can start making moves to increase that number and start striking off things on that financial to do list.  However, I know that’s sometimes easier said than done, so if you need some help, stay tuned for a post later this week where I show you the 6 best ways to increase your net worth.  And quickly ;)


Feel free to share – were you surprised at your net worth figure? What are you doing/plan to do to increase it?

Photo Credit: FLorian Klauer via Unsplash

Photo Credit: FLorian Klauer via Unsplash

 

[1] Stoffel, Brian. “The Typical American’s Net Worth by Age: Here’s Where You Stand.” 26 Jan 15. The Motley Fool. 24 Jul 16.