New to the Live Richer Challenge: Net Worth Edition? Learn more about it HERE.
Missed some of the Challenge tasks? Catch-up then come back…
Day 1: HERE: What does net worth mean?
Day 2: HERE: Why is net worth important?
Day 3: HERE: Your Liabilities
Week 1: A Wealthy Mindset
Today’s Easy Financial Task: Add up your assets.
How to rock this task:
- List your assets
- Add up how much you own
Hey, hey, hey! Welcome to another day of the LRC: Net Worth Edition, Dream Catcher.
Yesterday, you listed all of your liabilities.
If you missed that task, make sure to circle back on it because you’ll need it for tomorrow’s task.
Now, for today…
Pull out the Your Net Worth worksheet, again.
(Get your’s if you missed it yesterday HERE.)
It’s time to list your assets.
As mentioned, assets are items that you own that hold value.
For a quick refresher, here are examples of assets:
- Stocks and bonds
- Jewelry (figure out how much it’s worth by getting it appraised, or do a search online to see what similar pies are being sold for)
- Other investments
- Include the value of your retirement accounts
- Also, include the cash surrender value of your life insurance policy as an asset in your net worth calculation. This is the money your insurance company pays if you voluntarily terminate your policy before its maturity (or before the insured event occurs).
What about income?
Determining your net worth is similar to taking a financial snapshot, you don’t consider your annual income, but rather how much money you have “in the bank” right now.
What About Assets You Pay for With a Loan?
If you have a loan against assets like your car or home, for this task, subtract the value from your loan balance.
You will write down the portion of the property that you technically own. Here’s the equation:
Property Value – Loan Balance = Asset (Equity)
If your home value is $300,000 and your home loan balance is $250,000, $50,000 is how much equity you have in the home.
****UBER IMPORTANT TO NOTE*****
Because you’ve ALREADY written down your loan amount as a liability yesterday on Day 3, I DO NOT want you to subtract your loan amount twice, once in the liability column and again in the assets column. Instead, write the TOTAL value of your home/car/motorcycle etc., in the asset column of your worksheet. These are called depreciating assets (minus the home, typically).
Example: Let’s pretend your entire net worth is your home and it’s worth $250,000, but you owe $200,000.
Your net worth is $50,000. Assets ($250,000) – Liabilities ($200,000) = Net Worth ($50,000)
If instead of subtracting the total amount the house is worth, you subtract your equity ($50,000), from your liability ($200,000), your net worth will be -$150,000, which is wrong. Got it?
Keepin’ It Real With Your Assets
There are some assets where determining true value can be difficult like Beanie Babies (Dang! I’m getting old), art collections, or antiques.
Be realistic here to make sure you’re not overstating the value of any assets.
There’s no benefit in inflating your assets because doing so will only distort your net worth.
We don’t want that!
Consider the fair market value for each of your assets. The fair market value is what your asset would sell for today.
Not sure what that amount is?
Do some research online to see how much your assets have recently sold for.
For your home, you can use resources like:
For your car, you can use resources like:
Keep in mind that these websites are for estimates.
Go Forth and Write Down Your Assets
Have fuuuuuuun with this task, Dream Catchers!
Your assets increase your net worth.
Give yourself a pat on the back for every single asset you write down today!
These are things that you worked hard for.
Here’s the net worth spreadsheet you began to fill out yesterday with your liabilities, use it again today and add your assets: Net Worth Spreadsheet
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As always, be sure to check in with your accountability partner to double check that they’re keeping up with our daily tasks. Teamwork makes the dream work, and encouraging each other makes a difference!
Before setting out to work on this task, share what you’re doing with your tweeps:Today, I wrote down each of my assets. Day 4: #LiveRicherChallenge #LRCnetworth Click To Tweet
Any questions about what should be included in your asset section?
Hit the comments below or reach out to the other Dream Catchers in the Live Richer Community.
You can reach out to me here:
Facebook: The Budgetnista
Private Forum: Dream Catchers : LIVE RICHER
P.S. Don’t forget to get your free Live Richer Challenge: Net Worth Edition Starter Kit. GET HERE.
P.P.S. Here’s a copy of the Challenge Calendar. It’s a fun way to keep track of your progress.
Want to work through the Live Richer Challenge: Net Worth Edition in a workbook? It’s part of a bestselling series!
Click the link below and get your copy.
My Lisa Rule: I have 4 sisters and Lisa is the baby (well she’s not a baby anymore). Of all of my sisters, I’m the most protective over her. Before I share any product or service with you, it must pass my Lisa Rule.
What’s the Lisa Rule? If I would not advise Lisa to use a product or service, I won’t advise you to. YOU are my Lisas. I feel protective over you and your financial journey.
Ellevest passes my Lisa Rule. Yes, I am an affiliate of Ellevest, and I earn a commission off of referrals, but I would not recommend a product or service that I didn’t believe was helpful and useful.
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