What Is My Net Worth?

You often hear people referring to the “net worth” of people like celebrities and business people. For example you may have heard that Oprah Winfrey has a net worth of $1 billion or Bill Gates has a net worth of $40.7 billion. This leads one to ask; How is this net worth figure calculated? How do I figure out what my own net worth is?

Your net worth is not simply how much money you have in the bank. Just because Oprah Winfrey is “worth” $1 billion dollars does not mean she has that much handy!

You calculate your net worth by adding together your liquid assets, investments, and personal holdings and subtracting from that total your liabilities.

Liquid Assets are the total of the following: Bank account, Value of life insurance, Value of bonds, Pension funds, Brokerage funds, Money market funds, Trusts, & Debts owed to you.

Investments are the total of the following: Real estate, Stocks, Corporate bonds, Business investments, Mutual funds, & IRAs.

Personal Holdings are the total of the value of each of the following: Homes, Vehicles, Major appliances, Computers, Art, Antiques, Jewelry, and anything else you own that may be of considerable value such as collectibles or fine furniture.

Liabilities are the total of the following: Remaining owed on loans, Remaining owed on mortgages, Credit card debts, Taxes due, Bills owed, and any other debts you may have.

To get an idea of where you compare to others who are not billionaires like Oprah Winfrey or Bill Gates consider that almost 25% of people in their 20s have a negative net worth and the median net worth for people in their 20s is just under $8,000.