Finding Your Financial Location With A Net Worth Statement


Once you have your goals defined and have determined whether any money is required to accomplish them, you will need to know where you stand financially, which makes sense because you can’t travel to somewhere new if you don’t know your current location. That’s the clarity a net worth statement and a budget can provide. For this discussion, we will focus on the net worth statement. A net worth statement simply shows you what you own (assets), what you owe (liabilities), and the difference between the two, your net worth.

Here is the simple formula:

Assets (What You Own) – Liabilities (What You Owe) = Net Worth

Note: If you need to define your goals, read this article.


Creating a net worth statement not only gives you a clear picture of your current overall financial health but also provides the following:

  • Starting Point: Your net worth statement gives you the starting point required when developing your financial plan. Again, you can’t get to where you want to go without knowing where you are.
  • Benchmark: Regularly reviewing your statement will allow you to measure your progress towards your goals.
  • Insight: Your bank account may not show you the entire picture. You could have a growing savings account, but if you just bought an $80,000 car, your net worth and subsequent progress towards your life goals could have been negatively impacted. Hence, your net worth statement can make you aware of problems you otherwise may not have noticed, and you can’t fix problems you haven’t identified.


Again, creating a net worth statement is as simple as listing what you own and what you owe and finding the difference between the two.

Step 1: Add Up Your Assets (What You Own)

Add up everything you own that has monetary value. You can further divide your assets into liquid and illiquid assets. Also include assets that you are still paying for, such as a car or a house.

Here are some common items included in most net worth statements:

  • Cash: savings and checking accounts
  • Investments (retirement and non-retirement): TSP, IRAs, and non-retirement brokerage accounts
  • Real Estate: home and rental properties
  • Vehicles: cars, trucks, and boats
  • Other Valuables: jewelry, art, collector’s items, etc.

Step 2: Add Up Your Liabilities (What You Owe)

Now it’s time to add up everything you owe (liabilities). Like your assets, you can divide your liabilities into two categories: short-term and long-term liabilities. Adding these additional details can help you better understand your financial health when reviewing your statement. For example, you can see how your liquid assets align with your short-term liabilities. If you have significantly more short-term liabilities than liquid assets, you may have a cash flow problem developing.

Here are some common items included in most net worth statements:

  • Credit cards
  • Student loans
  • Mortgages
  • Car loans

Step 3: Calculate Your Net Worth

Now that you know your assets and liabilities’ total value, you can calculate your net worth. Again, simply subtract your liabilities from your assets, and the difference is your net worth.  

Assets – Liabilities = Net Worth

Note: Your income is not included in your net worth statement since your salary savings would be included in your savings/checking accounts. Remember, your net worth statement is a snapshot of what you have and what you owe today, whereas your budget shows you what your income and expenses are for a period (usually a month).


Like most things in financial planning, creating your net worth statement is not a one and done task. Regularly reviewing and updating your statement will allow you to track your progress towards your goals and ensure that you understand your financial situation. Since most people don’t enjoy reading financial statements during their free time, you can use apps to make tracking your net worth easier.

Several apps help you track your net worth, such as Mint, Personal Capital, or YNAB. The apps’ link your accounts and credit cards, allowing you to easily track your net worth. You can also use these apps to track your spending and keep track of your budget.


Creating a net worth statement will allow you to establish your current financial situation, track your progress towards your goals, and discover any areas needing improvement. Remember, any destination worth arriving at is worth planning for; hence, taking the time now to create your financial statement will pay dividends in the future. Finally, if you don’t feel confident in creating your financial plan, or if you would like an expert opinion on your financial situation, you should consult with a qualified financial planner.

Author: Jose Armenta, MsBA, CFP®, ChFC®, EA

Hi, I’m Jose Armenta, a Certified Financial Planner practitioner. For over 14 years, I have worked with or among federal employees, from serving in the Marine Corps to my stint as a police dispatcher and now as a financial planner specializing in helping FERS federal employees. In that time, I have spoken to hundreds of federal employees about their benefits and retirement. Helping federal employees maximize their benefits, reduce taxes, and live confidently is a passion of mine. When I am not perfecting financial plans, you’ll find me at the shooting range, playing the drums, or breaching blanket forts with my three little ones.