How to create a net worth statement?

To create a net worth statement, follow these steps according to Brad Barrett:

1. List Your Assets: Start by listing all assets, which include savings accounts, investments, retirement accounts, real estate, and other valuable items. Record the current market value of each asset. This task can be done using paper, Excel, Google spreadsheets, or any other tool you prefer 1.

2. List Your Liabilities: Write down all your liabilities. This includes credit card balances, mortgages, student loans, and any other debts. When listing real estate assets, remember to also include the corresponding mortgage as a liability to ensure accurate calculations 1.

3. Calculate Net Worth: Subtract the total liabilities from the total assets. This gives you your net worth. If the result is positive, you have a positive net worth. Conversely, if the result is negative, your liabilities exceed your assets 1.

4. Track Regularly: Brad Barrett recommends updating your net worth regularly, such as quarterly or annually, to monitor progress over time. This helps you keep track of financial growth and make informed decisions toward achieving financial independence 2.

5. Understand Your Income and Expenses: Apart from assets and liabilities, gain a clear understanding of your monthly or annual income and expenses. This provides insights into your financial health and how much you can potentially save and invest each year 3.

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     1

     Financial Clarity Essentials

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     2

     Understanding the 4% Rule

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     3

     Tracking Your Net Worth

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By following these steps, you'll have a comprehensive view of your financial situation, enabling you to make informed decisions to improve and maintain a healthy financial status.