By Jamie Seim
When it comes to managing your finances, few tools are as simple and powerful as a net worth statement. It gives you a clear snapshot of your financial health and helps guide your decisions toward long-term goals. But what exactly is it—and why should you care?
What Is a Net Worth Statement?
A net worth statement is a personal financial document that shows what you own (your assets) and what you owe (your liabilities). The formula is straightforward:
Net Worth equals Total Assets minus Total Liabilities.
- Assets include things like cash, savings, investments, retirement accounts, real estate and valuable personal property.
- Liabilities are debts such as credit card balances, student loans, mortgages and car loans.
The result is your net worth — a single number that reflects your overall financial position.
Why You Need One
- Clarity and Control A net worth statement gives you a big-picture view of your finances. It helps you understand where you stand, what’s working and what needs attention.
- Goal Tracking Whether you're saving for a home, paying off debt or planning for retirement, tracking your net worth over time shows your progress and keeps you motivated.
- Better Decision-Making Knowing your net worth can help you make smarter choices — like whether to take on new debt, invest more or cut back on spending.
- Early Warning System If your net worth is shrinking or stagnant, it’s a sign to reassess your financial habits before problems grow.
- Wealth Planning It’s a foundational tool for creating a budget, building an emergency fund or working with a financial adviser.
How to Create One
- List Your Assets Include checking and savings accounts, investment accounts, retirement funds, real estate, vehicles and any other valuable items.
- List Your Liabilities Add up all debts — credit cards, loans, mortgages and any money you owe.
- Do the Math Subtract your total liabilities from your total assets. That’s your net worth.
- Update Regularly Review your net worth quarterly or annually to stay on track and adjust your goals as needed.
Final Thought: Your net worth isn’t just a number — it’s a reflection of your financial journey. Whether you're just starting out or well on your way, tracking it can help you make informed decisions and build a more secure future.
This article was written by Jamie Seim, Managing Director-Investment Officer, Ponte Vedra Wealth Management Group of Wells Fargo Advisors in Ponte Vedra Beach.
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