Paycheck Chronicles

A New Year's Revelation


Graph_up I have an unusual New Year's tradition.  Sometime in the month of January, I sit down and figure out our family's net worth.  It is always interesting, sometimes delighting, and occasionally concerning, but it has helped me keep my eye on the big picture for 15 years now.  I tally up our assets and liabilities (debts) and figure out how our family is doing financially.  The general idea is that our net worth should be consistently increasing.  Many people (including me!) have discovered that their net worth decreased last year.  Fortunately, the bottom line isn't always the most important part of this exercise.  Taking an hour or so to put together a comprehensive look at our family's position often highlights things that we're doing well, or places for improvement.  Sometimes it is our family's debt that concerns me, or other times I'm pleased to see that we have a nice chunk of cash value assets.  Regardless, a regular net worth analysis is a great tool that will contribute to a solid financial plan.

Here's how to do it:

Photo by:  kevinzhengli

Start with a piece of paper (it's really going to be tough if it isn't at least lined, graphing might help if you are like that) or use a computer program (spreadsheets make the math easy.)  Here are your categories:


  • Cash or Cash equivalent:  here list any bank accounts, savings bonds, or any other accounts that you could cash in within a couple of days.
  • Investments:  Non-retirement stocks, bonds, mutual funds, fall into this category.
  • Retirement:  IRAs, TSP, and annuities go here.  You might want to try to calculate the value of a military pension; I choose not to but I do keep in mind that it exists.
  • Real Property:  Real estate, and any other large assets such as cars and boats.  Some people choose to include things like furniture, clothing and jewelry in a personal property category.  I don't because I can't really predict how much I might earn off all those items if I were to try to sell them all.
  • Unsecured:  Credit cards, signature loans, and student loans are all examples of unsecured debt.
  • Secured: includes mortgages, car payments, and home equity loans.  Anything that the lender will reasonably try to take back if you stop paying counts as a secured debt.
Customize this list to suit your situation and fill in the numbers.  It usually takes me about an hour or so to track down the right statements, check online accounts, and occasionally make a telephone call to find a number.  Estimate if necessary!    Subtract your liabilities from your assets and the result is your net worth.  Don't panic!  Some people will have negative numbers, which can be a little scary.  Even people with a positive net worth might be surprised at how low the number is.  According to, the median net worth in the U.S. is only $86,000, and that includes people who have been working for 50 years.

Fun or frightening, calculating your net worth is an eye-opening experience and a good way to gauge your financial progress over a big time period.  So open up your files, log onto your bank accounts, and get calculating!

This post was first published in January 2009, but my tradition remains the same, and I still find it to be useful. Make your own New Year's tradition and join me in facing your financial situation today.

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