How Much are You Worth?

January 13, 2016

Author: Dave Gardner

Now that 2015 is in the books, I encourage you to prepare (or update) your personal net worth statement as of the end of the year. If you have never done this, you are not alone. Everyone knows how much they’re paid, fewer know value of their homes, and small minority understand their net worth and also how much they spend on an annual basis.

While you may not have computed your total net worth before, it is arguably the most important data point to understand whether you are making progress toward your financial goals. Putting together a net worth statement may sound complex, but you can do it with a spreadsheet or legal paper. Some use resources such as, but with the automation of using an app comes complexity maintaining the connections with your financial institutions.

For most Americans, the biggest component of their net worth is their home. To approximate its value, go to, where a rough estimate is readily available. You can also look online at your county’s property assessment (in Boulder available at if you want to use their numbers. Put the home value in the left column under “Assets,” and then detail any mortgages and home equity lines of credit you have against your home in the right column labeled “Liabilities.” If you have other real estate holdings, then detail their value and any loans against them in a similar way. Let’s say your home is worth $620,000, and you have a $250,000 mortgage with a $20,000 home equity loan, which means your home contributes $350,000 to your net worth.

Next go to your investments as your year-end statements should be available online. Add up retirement plan balances such as 401(k), 403(b), and 457 plans. Then tabulate the value of your traditional IRAs, Roth IRAs, and taxable accounts held individually or jointly and put them in the asset column. Be sure to include 529 education plans, HSA accounts, stock options, RSUs, and employee stock if they are part of your financial situation. If there are loans against these assets, then put them in the liabilities column. Pensions can be valued by pricing a deferred fixed annuity on Also include checking and savings accounts, deferred annuities, and cash value life insurance. If you have $200,000 in combined retirement plan balances with a $20,000 loan, another $150,000 in other investments and checking accounts, and an annuity with a surrender value of $30,000, these assets contribute another $360,000 to your net worth.

If you own vehicles, go to and get an approximation of their value in a third-party transaction and put them down in assets, while writing any car loans into the liabilities column. Doing this every year, you’ll note how much your car depreciates every year, which with most newer vehicles far outpaces what you spend on insurance, maintenance, and repairs. We’ll assume your vehicles are worth a combined $40,000, with a $15,000 loan against one of them.

With many business owners, the biggest component of their net worth is the value of their business. Although many small businesses have no value at all. Let’s assume your business generates free cash flow of $150,000 a year after taking out the salary you would have to pay someone to do your job. Coming up with a multiplier is very specific your business and industry, but let’s say after talking with a business broker you find a good multiplier is 2 times free cash flow. This means your business is worth about $300,000.

Finally, we can’t forget the personal liabilities, including credit card balances, student loans, store credit, and personal lines of credit. Let’s say you have $5,000 in credit card balances and $40,000 in student loans.

For your total net worth, add up all of your assets and subtract the liabilities. With our example, $350,000 net home value plus $360,000 net investment value, $25,000 net vehicle value, $300,000 business value, and $45,000 in general debt would leave you with a net worth of $990,000, tantalizingly close to a seven figure net worth.

So how should you feel about this? Well it depends on your age and future need for cash flow. If you’re a 65 year old retiree spending $100,000 a year, you are not in as good of shape than if you’re 35 years old and maximizing your 401(k) contributions every year. As a reference, the median household net worth at the end of 2013 was $81,400, although this has likely increased with improved housing and stock markets.

Finally I want you to share this information with your spouse, as it’s likely just one of you tracks this information carefully. They may not care about the minutiae of selecting 401(k) options, but they’ll be heartened to hear you are making progress toward your goals.

, , , , , , , , , , , , , , , ,
About Dave Gardner

David Gardner is a certified financial planner with a practice in Boulder County and can be reached at and at