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           Life isn't about finding yourself. Life is about Creating Yourself                          George Bernard Shaw

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Step 1 Create a clear current financial picture of yourself

Your Net Worth Statement

Step 1 Create a clear current financial picture of yourself

In other words, you need to know what your net worth is!

Have you ever taken a family trip where not long after getting in the car the kids started crying, “Are we there yet?” or “How much longer?” or “I’m bored”? I think we all have. Yet on the way home the trip seemed a lot faster and yet it was the same distance. Isn’t it weird how perception makes a huge difference to the overall picture? 

Your overall financial picture is the same. Who was it that quipped, “They say the first million is the hardest to make, so I will start on the second first!” But seriously, the most important step is the first one, taking action. The action you need to take is finding the starting line — where are you financially right now? This is called a Personal Net-Worth statement, and it is amazing how many people do not know where they are financially. 

Accountants would tell you to add up all of your assets, subtract your liabilities, and voila’ you have your net worth. Unfortunately this number can be positive or negative. Investors use this number to decide if they would invest in a particular company or not. They check to see if the company would go into receivership would there be any money left over if the company sold everything they own and paid of all of their debts? Naturally, any money left over would technically go to the shareholders.

You and if you have any family who you are responsible are shareholders in the company called – YOU. Consequently knowing your net worth is essential. More importantly we need to make sure that it is always positive.

This is not a once and done exercise. You financial landscape is always changing and should be looked at yearly.  

What is a reasonable net worth to have compared to the average person in North America?

Age

Salary saved

Should have

Average

30

½

$ 76,300

$ 13,900

40

2

$ 426,200

$ 91,300

50

4

$ 833,200

$ 168,600

60

6

$ 1,175,900

$ 212,500

Retirement

10

$ 1,217,700

$ 266,400

 

Remember you are adding up the total value of your assets and subtracting all of your debts.

This will only take a few minutes, but they will be a couple of the most important minutes you will spend. 

  1. Make a list of everything you own and a close approximation of what you could realistically sell it for if you had to? If push comes to shove and a major recession hits or your income dries up for a period, you have some options. 

Asset Items 

Value (to someone else not you) 

Income 

Savings 

$ 950 

 

Investments 

$ xxx 

 

Computer 

$ 300 

 

DSLR camera 

$ 500 

 

Clothes 

$ 250 

 

Car 

$ 10,000 

 

House 

$ XXXX 

 

And so on … yes it is important to list as much as you can. 

 

 

     Main job 

     Secondary income (or partner) 

 

$ 65,000 – $ 5416 per month 

$ 30,000 – $ 2,500 per month 

                                             Total 

$ xxx,xxx 

$ XXXX   $ x,xxx 

 

  1. Make a list of everything that you owe.  

 

Liability Items 

Amount owing 

Monthly payment 

List outstanding bills individually (anything over 30 days — cell phone, utilities, rent, etc.) 

$ xxx 

Minimum payment required 

List all credit cards and interest they charge individually (visa, MC, stores, gas, etc.) 

 

Visa 20% 

MC 11% 

 

 

 

 

$ 10,000 

 $ 3,000 

 

 

 

Minimum payment required 

Leases and their interest rate 

Car 3% 

Rent 

 

 

 

$ 300 per month 

$ XXX 

List a loans with their interest percentage 

Mom and Dad 0% 

Student loan 5% 

Car loan 3% 

Mortgage 3% 

 

$ 1,000 

$ 10,000 

$150 

$ 450,000   

 

Minimum payment required 

 

 

$ 800 per month 

Total 

$ xxxx,xxx 

$ xxxx 

 

  1. Net worth and Net Income 

 

Assets – Liabilities = net worth 

$ xxxxx 

 

Montly Income – monthly payments 

 

$ xxxxx 

 

Now we know where you stand financially, regardless of the numbers, this is a good thing. If you need to go to a bank to get a mortgage or loan, you would require this information. More importantly, it gives you the starting point of your financial journey.  

This will only take a few minutes, but they will be a couple of the most important minutes you will spend. 

 

Click below for the Ontario Securities NET Worth Calculator