Knowing your net worth is an important part of financial planning and is generally tracked with a net worth statement. If you don't know where you are financially, how can you plan your journey? In simplest terms, your net worth is your assets minus your liabilities. It is generally recommended that you update your net worth statement at least annually. Reviewing your net worth statement may help in identifying strengths and weaknesses in your financial situation.
Once you have created your net worth statement, don't just leave it to gather dust. It should be part of your annual review process to update your net worth statement to reflect changes that have occurred. Some values will be easy to obtain, such as bank account balances, value of investments, outstanding balances on credit cards and mortgages. Others may be more difficult, such as the value of a residence. Use the best guestimate available, such as your most recent property tax assessment.
Tracking the details
Your net worth statement can also serve the purpose to tracking the location of assets and liabilities and could greatly assist your executor when you die, or your representative should you become incapacitated.
Most Canadian banks and financial institutions offer online tools that can help pull together a simple net worth statement. The following list is intended to provide a sample of what is available, you should likely check the website of your financial institution to see if they have a tool that might be useful for you.
- getsmarteraboutmoney.ca - Net Worth Calculator
- TD Canada Trust - Personal Net Worth Calculator
- RBC Royal Bank - RRSP Net Worth Calculator