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Freeman's Blog


February 18, 2015

Ask most people what their net worth is and they probably don’t know. In many ways, viewing your net worth is like watching your weight: it’s healthy to set reasonable goals that make sense for you and your current situation. Comparing yourself to others only helps if you’re getting started and struggling to get a feel for where you stand.

How to calculate your net worth

In essence, net worth is calculated by taking everything you own (stuff, cars, houses,portfolios, etc.) and subtracting out everything you owe (college loans, mortgages, credit card debt, etc.). For the purposes of this article, we won’t be including pension plans, the cash value of life insurance policies, or the value of household furniture or jewelry in our calculations.

Take a minute and think about everything you own and owe. The things you own are called assets and go on one side of the sheet. The things you owe are called liabilities and go on the other. If you’re confused about the car you’ve borrowed for or your house that has a mortgage, put the fair value of those things in the “Assets” category, and the amount you still owe in the “Liabilities” category.

Where do you stand?

Back in 2011, the U.S. Census Bureau published a report breaking down the median household net worth by age and in quintiles. The plain English explanation is this: the 30th percentile means that if you have exactly this net worth, it is greater than 30% of households your age. The same is true for the 50th and 70th percentiles.

What is your net worth?

Sources: USAToday | January 31, 2015 | Typical net worth by age: Where do you stand?

Freeman Owen, Jr - Host of "Safe Money Talk" on CBS Radio The Big Talker 1580AM I do things the way my mother always taught me. I look a couple eye-ball-to-eye-ball and give you easy, attainable ways to protect your nest egg for your golden years. Should you wish to meet me for a FREE retirement strategy consultation, contact my office at (866)471-7233 | MD, VA & DC.