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Blogging for Change Blogging For Change
by sitecore\kmcgrigg on April 08, 2009

In honor of Financial Literacy Month, we created a microsite that offers 30 simple steps to financial wellness--one for each day of the month. To enrich the experience, we asked some amazing people to guest post during the month on a topic that is related to the day’s step. Their dedication to financial literacy is truly inspiring! Today, multitasking mommy Jodi Grundig discusses how to identify your starting point.

Calculating your net worth is the best way to know exactly what your starting point is, in any financial plan you develop. It's essentially the foundation of your financial plan and goal setting, and needs to be updated at least several times a year so that you can track all of your progress. Putting together a balance sheet is quick and easy, even if you aren't a finance expert!

A balance sheet calculates your net worth, by comparing your financial assets (what you own) with your financial liabilities (what you owe). The difference between the two is your net worth. Don't be discouraged if your net worth is negative -- keep in mind that this should be an accurate depiction of your financial situation. Setting goals is much easier once you know what your current net worth is.

Before you get started, pull together all of the information that you have available. You'll need your latest bank statements, as well as the principal balance of any loans you have. Once you have all of that information available, start developing your balance sheet by listing all of your assets (financial and tangible assets) with the values. You can use the tool on the microsite, or create your own version on paper or in a spreadsheet tool.

• Cash (in the bank, money market accounts, or CDs)
• All investments (mutual funds, college savings accounts, individual securities)
• Home value (the resale value of your home)
• Automobile value (the resale value of your car - use Kelley's Blue Book if you don't know)
• Personal Property Value (resale value of jewelry, household items, etc)
• Other assets

The sum of all of those values is the total value of your assets. Your goal should be to continually increase your assets.

Next, you can look at your liabilities, which should be everything you owe. Here are some common liability categories:

• Remaining mortgage balance
• Car loans
• Student loans
• Any other personal loans
• Credit card balances

The sum of all of the money you owe is your liabilities. As you start to pay down your debt, your total liabilities will decrease. The difference between your assets and your liabilities is your net worth. You can start to increase your net worth by decreasing your liabilities, increasing your assets, or by doing both! Make sure you continuously update your balance sheet - at least twice per year - to ensure that you are meeting all of your financial goals.

Jodi Grundig is a part-time director of finance and a part-time stay a home mom. She writes products reviews at Mom's Favorite Stuff and writes about her life at For budgeting tips, read her Budgeting 101 tips.



Anonymous says:
August 08, 2011

Seeing your net worth compared to what you owe and have is eye opening. In my case, I am not that debt heavy. We are making progress.

Judi Garcia says:
October 05, 2014

Indigent. Ideas?

Maria Reyes says:
October 04, 2015

Great tool

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