The benefits of having an exercise partner are clear. There is strength in numbers. We hold ourselves more accountable when someone else is watching, and working out with a pal can make the time fly by. Why not approach personal finance the same way? This is a series following the progress of two sisters who have added a new label to their friendship – financial fitness buddies.
Be honest, have you ever calculated your net worth?
Many of us have not.
"Net worth" sounds big and complicated, and to some it sounds like a term that describes only the wealthy. But determining our net worth – which measures the difference between what we own and what we owe – is something everyone should do, every year. It helps us track our financial progress from year to year to make sure we're on the right path.
It has become the year of all-things financial for my sister/financial fitness buddy and me. We agreed that we couldn't have a financial fitness challenge without a net worth calculation. My sister can now cross that to-do item off her list. She was glad she slowed down and took the time to complete the exercise.
When we determine our net worth, we can see – on paper – if our debts are in line with our assets, if our investments are growing and if we are adequately covered with life or disability insurance. Tracking our progress on paper helps hold ourselves accountable.
"It's just like goals. We're not as likely to achieve them if we don't write them down," says Tami Rechtenbach, vice president of member services at Dupaco. "When you have a written commitment to meet those goals, you're setting your road map for success."
Calculating your net worth isn't as complicated as you might think. It's really a matter of getting organized.
To get started, take stock of the physical things you own, including everything from cars, collectibles and jewelry; to savings, checking and retirement accounts; to the cash value of life insurance policies. You also need to know what your liabilities are: mortgage balances, car loans, student loans, etc.
When you have those numbers ready, you can plug those in to the Home & Family Finance Resource Center's Net Worth Calculator. The goal is to have a positive net worth that grows each year.
To get a better look at your total financial picture, and to find out ways you can make your net worth grow, schedule a free Dupaco Money Makeover.
By Emily Kittle