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The beginning of the year is a great time to review your net worth. This is a list of your assets versus your liabilities or, put another way, how much you own versus how much you owe.
This is a personal balance sheet and provides a good measure of your financial health each year.
Obviously, you want to have more assets than liabilities – a positive net worth – but the main reason for the exercise is to check that you are moving in the right direction each year.
READ: Personal Finance | The difference between ‘good’ and ‘bad’ debt review
You want to know that each year your debts are decreasing, and your investments are growing.
READ: Personal Finance | Choices and financial freedom
For your property valuation, either use the purchase price if you bought the property in the last five years or the municipal value of your property as an indication.
Use the trade value of your car for the calculation, which you can obtain from a dealership.
Then list all your liabilities. This would be your outstanding mortgage and all other debt, including car finance, credit card accounts, store cards.
READ: How not to be your family's ATM
Even if you commit just a small amount of money to reducing your debts and growing your investments, it will have a positive impact on your net worth.
Seeing your net worth grow each year will give you the motivation and discipline to stick to your financial goals.
