One can calculate their net-worths using net worths calculator from the website net-worths.org. Once the net worth is calculated one will get an idea of what is needed to get to the destination and plan accordingly.
Net worth is the amount of the assets apart from the liabilities. This concept can be applied to any company or individuals and can serve as a benchmark to measure the financial health. The formula for calculating net worth is as follows:
Net worth = Assets – liabilities
Thus, one should determine their assets and also liabilities to calculate net worth.
Determining the assets: The liquid assets are those that can be easily turned into cash such as bank accounts, deposit certificates, mutual funds, stocks, bonds, and other similar investments. Your primary residence and real estate holdings and properties and other partnerships in the business will also come in assets. All the personal property such as vehicles, jewelry, clothing can be excluded from this.
Determining the liabilities: All the debts such as credit cards, home mortgages, car loans, and business loans will come under liabilities. All the lifestyle-related factors such as when a person with low income with sparing spending habits or vice-versa can screw up their net worth calculation.
Thus, after the calculation of assets and liabilities, one can calculate its net worth.
Another formula for calculating net worth is as follows:
Net Worth = Age * Pretax income / 10
The mitigating factors play an important role in net worth. If an individual is a self – employed individual will have triple net worth compared to the individual working as an employer. Also, an educated person will have more net worth compared to the individual who has less education. Thus, calculation of net worth is not universal. All these mitigating factors need to be considered while doing comparisons against national averages.