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It is important to have a clear goal in your life and have a basic understanding of your current position so you would be able to map out a way to realize those goals. If you know your net worth you would be able to reevaluate yourself and can chart out your goals and ways to achieve those particular goals.

It is a rewarding task as you not only identify your value which helps you move forward in life but also help you spot weaknesses where you are unnecessarily spending and accumulating debt. Simple 3 steps measure can help you achieve your long term and short terms goals.

Net worth simply put is your assets subtracted with your liabilities. Before sitting down to calculate your net worth you should first collect all your financial information in one place like your bank statement, property valuation papers (any property that you hold should be evaluated in regard of inflation, market rates), liability documents (if you have some liabilities which do not show up in your bank statements), financial portfolio (basically, your investments)

Once you are ready follow these 3 basic steps to find your net-worth and give your career a head start

Step 1: Calculate your Total Assets

Start calculating your assets from the most liquid ones (cash and cash equivalent) which can easily be converted to cash and gradually move onto other financial and physical assets.

Total Assets = Sum of the items given below

Cash in your possession

Cash in your savings account, current account

Debt investments (Treasury Bill, Money market account etc.)

Certificates of deposits

Bonds

Annuities

Mutual Funds

Stocks

PPF

Collectible (paintings, NFTs, Coins)

Property Value (use the current market value of the plot + market price of your house)

Jewelry

Points to Note: For stocks and mutual funds you have to take into account the current market value of your portfolio. For other investments like PPFs and annuities, you have to consider the current investment value of that particular asset.

Step 2: Calculate your liabilities

Calculating your liabilities is easier than assets as they are easily quantifiable. Companies, banks constantly send reminders to you about your outstanding debt to them. So, include all the loans such as personal, home, car or education loans to arrive at your total liability.

Total Liability is the sum of the following items:

Vehicle Loans (original + interest)

Home Loans (original + interest)

Taxes

Student Loan

Personal Loan

Credit Card Debt

other debt and outstanding bill

Step 3: Total Asset- Total Liability = Net worth

After calculating both of the above value subtract liability from your assets and you would land on your net worth

Note: That the value derived from this formula would be your estimated net worth and not your precise net worth as calculating that would be an extremely tiresome process because it keeps on fluctuating because of factors like inflation, depreciation and so on.

Calculating your net worth gives you an eye-opener as you can now mathematically calculate where you are financially right now and where you want to be. This will not only keep you motivated to work hard but would also help in organizing your financial life.