How to Calculate Personal Financial Net Worth

financial net worth calculator with free template

One of the most important activities in personal financial management is the periodic assessment of personal financial net worth. It is like the barometer of financial health.

Have you ever assessed your personal financial net worth? If your answer is yes, that looks good. However, if your response is no, then you are making a major personal financial mistake. But don’t worry, as this article explains the whole process with a free Excel template.

What is a financial net worth?

Financial net worth statement shows a person’s wealth position as at a particular date. Similar to the balance sheet for companies, it is the value of assets a person owned minus liabilities he/she owed. In simple term, it is the total personal assets minus the liabilities.

Importance of financial net worth statement

  • Knowing your net worth will help you to improve on money management. It is only a person who has an idea of their financial net worth can be mindful of their financial decisions. For instance, if your net worth show a negative position or less than the expected position it can motivate you to watch your spending or increase your means in other to save more money.
  • Debts reduce your net worth. Some people would only think of their investments or cash in bank and ignore the liabilities when it comes to net worth. Well, this does not reflect their true position. You may have high value assets such as properties which were purchased through bank loans, and the loans have to be paid in the future. If the properties are valued at D600k but the mortgage loans are D1 million, then your net worth is negative D400k. Without assessment, you may not notice this gap.
  • Being aware of your financial net worth helps you with financial planning. As the saying goes, you never know how to get somewhere unless you know where you are right now. Financial net worth statement helps you to see the financial run rate between your position and your financial goals. These goals may include buying house, funding educational cost, buying a new car, retirement funds or to join the millionaire den. If you plan to start a business in 3 years’ time say with D100,000 self funding, your net worth statement will show an indication of the financial distance to that goal.
  • It shows how you have been allocating and managing your earnings overtime – Earnings can be allocated to either savings or spending. If you earned D100,000 in a year and your net worth increased by only D5,000; it means you have spent D95,000 or you lost value in some investments.
  • Some banks request for personal net worth statement of the owner as part of the documents required to approve small business loan request.

Whiles the financial net worth numbers are important, you should never assumed it to be your net worth as a human being.

There is no relationship between the human net worth and the person’s financial net worth. You are also discouraged from comparing it with others. Personal financial net worth is to estimate your financial position, which should be compared to your financial goals.

How frequent should you prepare financial net worth statement ?

Most expert recommends quarterly calculation of personal financial net worth; however, I review my numbers on half-yearly basis. This is because my numbers do not change that often. You will also found some people who assess it on monthly basis. Nonetheless, it is important to repeat this process at least once a year and compare it with your goals. This will help you to determine if you are making progress or getting further behind.

You can get a free Excel template to calculate your net worth.

How to Calculate Personal Financial net worth

You do not need to be an accountant to calculate net worth position. With some basic financial information, it is pretty simple to assess the financial situation. Below are the key steps:

A. List all your key assets with their values

To determine your net worth, the first step is to take a list at all the valuable assets you owned. Financial assets are the real money or investments you can convert to cash. If you are not sure of assets, here are some examples:

  1. Cash and bank balances–Include the cash in hand and the balance in your savings, current, or call accounts.
  2. Financial InvestmentsInvestment includes the quoted and unquoted shares, bonds, Treasury bill, private placement, mutual funds etc. It is best to record them at current market value. This reflects the updated value of the investment.
  3. Pension funds– include your private and statutory pension contribution balances. If you are in the Gambia, this relates to SSHFC pension funds.
  4. Motor Vehiclesthe current value of your cars. You can use expert valuation or the accountants’ net book values. For instance, I assumes that my personal cars depreciate at 20% of cost value every year.
  5. Real estates– the current market value of your properties (house, land, etc.). You can engage a valuation expert or use the total cost approach with accounting depreciation. The key point is to be consistent and reasonable with the valuation method.
  6. Personal Valuables– including the market value of other valuables e.g. artworks, gold etc.
  7. Other receivables– If you reasonably believe the person will pay you; then add them to your assets. Only include assets that have value. So you are not expected to add your old furniture or clothing.

Some experts recommend the exclusion of residential properties and motor vehicles from net worth statement. However, this is subject to the purpose and even the person’s age. A person assessing financial position for estate planning should include all the properties.

B. List all your liabilities

When you’re done listing assets, make a separate list of liabilities with their values. Liabilities are any debts or payments you owe to someone else. Here are the most common examples:

  1. Mortgage– the outstanding balance (principal and accrued interest) to pay on your mortgage loan.
  2. Car loanthe balance on your car or auto loans.
  3. Personal loans– the balance on other loans. It is important to note that the loans should be recorded as outstanding balance plus any accrued interest and fees as at the statement date.
  4. Credit card debt– any outstanding balance owed on your credit card(s).
  5. Other payable– This may include tax, outstanding bills and payable to other people.

C. Calculate net worth position

Now that you’ve gathered all the information about your financial assets and liabilities, simply find a grand total of the assets and a grand total of the liabilities.

Finally, subtract the total liabilities from the total assets and the result is your financial net worth. For example if the total assets are D62,500 and the total liabilities are D22,000 then your net worth will be D40,500.00 (D62,500-D22,000).

Your net worth could be negative or positive depending on whether you have more assets than debts or otherwise. However, whether you have a positive or negative net worth, it’s important to know that the result relates to your past decisions. You can change it if the results are poor or keep up if they are encouraging.

How to improve your net worth.

Some people feel sad when they calculate their net worth and discover that it is negative or very low. Imagine someone who worked for 10 years with an average salary of D100,000 per annum, however his financial net worth is less than D150,000

If your personal net worth is negative or less than amount you expect, you have 2 major options to improve it:

  • Increase your means through additional income
  • Manage your expenses

To do this, there are many things you could do such as:

And so on!


Remember you prepare financial net worth to assess yourself and It does not matter whether you are an executive or a student; your financial planning and discipline determines your financial success.

About Ebrima Sawaneh 118 Articles
My Name is Ebrima. I write about personal finance, small business, and The Gambia to support young people. I am an accountant, banker, and Amazon international bestselling author. Feel free to drop a message or download my free eBooks - HERE read

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