The Value of a Net Worth Statement

The Value of a Net Worth Statement

When most people hear of Net Worth Statements they think that they only apply to those with lots of money and assets. A Net Worth Statement however is extremely valuable for everyone to put together. Here are some things for you to consider.

What is a Net Worth Statement?

Simply put, a Net Worth Statement is a calculation of the assets you own (cash, investments, life insurance, property) minus the liabilities you owe (mortgage, car loans, credit card debt etc.). This provides you with a picture of your financial situation at a specific point in time.

Reasons to do a Net Worth Statement

  1. A Net Worth Statement will help you see where things stand at this present time. Having this information will help in your planning of goals for the future.
  2. Seeing the list of assets and liabilities will help you prioritize where you need to increase income or reduce expenses to meet your financial plans.
  3. As your financial situation changes over time a Net Worth Statement can tell you quickly if you are on the right track to meeting your financial goals.

Is a Net Worth Statement the same as a budget?

No. A budget lists the income (usually after taxes) and the specific expenses incurred each month while a Net Worth Statement gives a snapshot of your overall financial position at a specific point in time. We highly encourage having a budget as well as a Net Worth Statement.

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If you need help putting together a Net Worth Statement please contact us for more information.