Financially speaking, knowing your net worth is a vital life statistic that can drive many life decisions. In my opinion, our education system requires more early financial training starting in high school as students are entering the workforce and earning income. For myself, part of the reason I selected Economics as my undergraduate was because I knew I did not understand the world of finance and wanted to learn more. In my studies, I’m glad I discovered the two major forces that guide us in the world today are gravity and compound interest. Now that I have a son in college, I have encouraged him to invest his intern money wisely and, at the age of 18, already has contributed to a Roth retirement savings account. I recommend you look into a Roth investment account if not doing so already doing.
A Net Worth statement compels you to become more organized with your financial data. The spreadsheet I am sharing with you provides the major categories to determine your financial worth. It is organized as a standard balance sheet with the necessary assets and liability categories to help you understand your current financial standing. The beauty of using Excel is that it is dynamic, flexible, and you can perform what if scenarios to help you plan your goals. I recommend adding more information on the file than the minimum listed, you can add easily helpful notes to adjacent to your financial information. Excel provides more options to provide additional information to your net worth statement then other financial software such as Quicken or other online options.
Personally, I enter supplemental information on each row of data, such as the account home website of the financial data, to quickly access the sign-in page while updating my Net Worth statement. I typically update a minimum of once per year or if a major financial change occurs such as buying a major investment, selling a home etc. I always keep my passwords located in a separate document. I encourage you to password protect your Excel Net Worth Statement file.
A brief topic I mention in the video below is the 4% retirement withdrawal rule created by William Bengen. Here is a video link if you would like to see a recent interview with him link. Mr. Bengen is recognized for this broadly discussed and controversial retirement 4% withdraw guide. Watching the interview you’ll discover he provides deep insights into retirement planning and that he is generally a good person with financial knowledge who tries to help others in life.
My overview of a Net Worth Statement to help you Plan your Plan
Excel Template to download