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In our previous article we got to know what Networth is all about and how important it is to know where you stand in your financial journey!

Use the worksheet given to fill out all the investments/savings and the Debts accumulated so far. Do not add property like apartments into the asset field. I know this sounds harsh , but we will soon explain why I am saying this in the chapters to come. Please make sure that you sincerely jot down everything.

Fill it privately if possible and keep this a secret that nobody gets to see or hear about. Sometimes one’s Net Worth can be really embarrassing and for few it might be a cause for jealousy among family and friends ! Showing it to your Spouse is encouraged if the Net Worth turns out to be a negative.

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Here is a worksheet that will help calculate your Net Worth easily.

How do we go about filling the Net Worth Sheet ( NWS )?

The thick Line dead center of the sheet is the Ground Zero line.

Everything below Ground ZERO is where you put in every loan/debt amount appending it with a negative sign ( “-” ) . Also mention details about the debt and why it was taken. Everything above ZERO Line is for savings/investment. Don’t forget to mention the type of saving.

Fill up NWS with a pencil to allow updates in the future. I would encourage you to update this sheet every month without fail. It will tell you if the financial condition is getting better or worsening every month.

Calculating NET WORTH is now easy.

Just add up all the fields above and below the ZERO Line and you will finally see your Net Worth. Write down the final number in the Net Worth field given on top the sheet.

Do append a negative sign on the final Net Worth number that you get. 

 A diligently filled NWS would look something like this

Seeing Net Worth inching towards the ZERO line is a great self motivator. NWS will be the only source of truth going forward. We now know exactly where we stand financially.

If your Net Worth is a positive number , then you are probably already on the path to creating the corpus needed for your retirement.

If Net Worth is negative , it is time to buckle up and clear your debt asap. Like I said earlier, your main goal going forward is to sprint towards the ZERO Line first. Once you have crossed the ZERO line , start building your retirement fund. It’s a long way to go , but achievable by all means !

The best and probably the easiest way to understand how to increase one’s Net Worth is to study the Ethical Rich. Using the word ethical is very important! One can get rich with a lot of unethical means in this world. We know that crime never pays and reading random stuff on the internet on how to swindle the government  of taxes or researching on how to run a drug cartel should not be the goal.

The easiest way to study the Ethical rich is to go through their biography or their books on investment. Some of the investment geniuses like

• Warren Buffett , Founder Berkshire Hathaway and called the Oracle of Omaha for his amazing insight on Investment is Stocks of great companies.
• John C Bogle , Founder of Vanguard and the creator of one of the worlds most successful Index Funds (Vanguard  500 Index Fund)
• Ray Dalio , founder of Bridgewater Associates

All the above mentioned are giants in the world of investment and are among the top 100 richest in the world. They might have been lucky being born in the US , but luck cannot make you one of  the richest. Luck can make one win a lottery , but studies have shown that 95% of the lottery winners go bankrupt within 5 years of winning it ! So there must be something different these guys are doing to remain among the top 100 richest in the world !

John C Bogle was not among the top 100 because of his philanthropic deeds. He donated more than half his earnings every year to charity. His goal in life was to help others which led to the creation of Vanguard Index Fund, which has the lowest of the fees for a passively managed fund.

In other words if you have the power/potential build something substantial, don’t forget to help others too .

Read Next : Net Worth 101 

Please read the disclaimer carefully before making any investment based on the articles published on this Blog !!