I had an interesting talk with a friend of mine over coffee. Okay, so we’re both 24 but around three years out of our respective undergraduate degrees. Nothing much to talk about regarding personal finances? Not really. I was complaining about how tough the real world is and it does take a lot of guts to try strike it rich at a young age. Well given that she’ll eventually be a lawyer who’d be raking in big bucks, it’s just a matter of time for her. For me, it’s all about playing it smart, diversifying income streams, and always being on top of my financial figures. So have you thought about your net worth?

Again, like calculating your debt-to-income ratio, it’s all about getting the numbers right, and doing simple arithmetic. But instead of income streams and monthly debt figures, we’re focusing on total assets and liabilities.

Start out by listing the fixed assets that you’ve acquired over the years such as real estate and cars, at their current value. Kelly Blue Book gives a great valuation of cars. It would help if you stay realistic with the figures. Always strive for the mean rather than the highest valuation. For me, I always go for the pessimistic estimates and get the lowest figures.

Next, list all your liquid assets like cash, bonds, accounts, stocks, mutual funds, life insurance cash value (current), and certificates of deposits (like for time deposits). It’s good practice to factor in taxes when dealing with stocks and deposits to get the real score.

Next, list all your other property that may be of value - household items, furniture, and jewelry all at the current value. You can always check online about the current resale values of a lot of things.

With these values at hand, add them all up to get your total assets.

Now get all of your debts (mortgages, car loan, credit card balances, personal debts) add them all up to get your total liabilities.

Subtract your total liabilities from your total assets to get your net worth.

Positive or negative? A lot of people will come in negative because of their mortgages, and debts but knowing this can help you refocus your attention. It’s again of good practice to update your calculations yearly and plot whether you’re doing progress eliminating debt.