Money Coaching Tip, Jan. 3, 2010: Know Your Net Worth.
Nail it down. So many of my clients would orient their sense of financial reality in things like their debt or their cash flow.
The grounding point instead should be your net worth. The rest is a matter of working out the details.
A little 101: your net worth is what you own versus what you owe, when you sum it all up. It can get a bit tricky – do you count your car as an asset? What about your furniture? Your jewelry? Personally, I kept it simple, factoring in only the value of my home, how much I owed on my mortgage, my debt, my investments’ value and any pieces of furniture valued over $2K.
So take 30 minutes, open an excel spreadsheet (or whatever works for you) and plug in the numbers. Revisit this at least annually, but ideally every six months or so (more often if you have a volatile portfolio).