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