A net worth statement is a financial statement that summarizes your assets, liabilities, and net worth. It is a snapshot of your financial health at a specific point in time. A net worth statement can be used to track your progress towards financial goals, make informed financial decisions, and identify areas where you can improve your financial situation.
There are many different ways to create a net worth statement. You can use a spreadsheet, a budgeting app, or even a simple piece of paper. The most important thing is to be consistent with your method and to update your statement regularly.
Assets
Assets are anything that has value and can be converted into cash. Assets can be divided into two categories: current assets and non-current assets. Current assets are assets that can be converted into cash within one year. Examples of current assets include cash, checking accounts, savings accounts, and marketable securities.
Non-current assets are assets that cannot be converted into cash within one year. Examples of non-current assets include real estate, vehicles, and equipment. Land and buildings are two other examples of non-current assets. These are considered to be fixed assets since they are fixed and not easily converted into cash.
Your home is considered an asset. While you own it, you do not have access to the cash it’s worth unless you sell it or take out a home equity loan. Stocks, bonds, and mutual funds are considered investments. They are also considered assets.
Liabilities
Liabilities are debts that you owe to others. Liabilities can be divided into two categories: current liabilities and non-current liabilities. Current liabilities are debts that are due within one year. Examples of current liabilities include credit card debt, short-term loans, and accounts payable.
Non-current liabilities are debts that are due more than one year from now. Examples of non-current liabilities include mortgages, long-term loans, and bonds payable. You can think of non-current liabilities as long-term debt. One example of a non-current liability is student loans. These usually take 10+ years to pay off.
When you create a free net worth statement template, you will list out all of your current liabilities. You will also list out all of your non-current liabilities. Once you have your list, you can calculate your total liabilities.
Net Worth
Your net worth is the difference between your assets and your liabilities. A positive net worth means that you have more assets than liabilities. A negative net worth means that you have more liabilities than assets.
Your net worth is a measure of your financial health. A high net worth means that you are in a good financial position. A low net worth means that you may need to make some changes to your financial plan.
