Net Worth Statement and Financial Planning

A net worth statement tells you your true worth at a given point in time. A net worth statement is nothing but your assets subtracted by your liabilities. Now what all is to be included under assets? Assets are of five types,

Assets

The first is equity - it includes direct stocks, equity mutual funds and ULIPs. The second one is debt, which includes fixed deposits, debt funds, PFs, Post office investments, Traditional life insurance premiums, insurance policy could be a money back policy, endowment, etc. The next asset class is liquid, it includes cash, your savings and current account balance and liquid funds. Fourth asset class is gold, which includes gold coins, bars, gold funds and gold exchange treated funds. We have intentionally excluded gold jewelry from gold asset class because we might think it is an asset but we sold on selling. The last asset class is real estate which includes your house, land and commercial space.

Liabilities

It includes all your loans which could be personal, vehicle, home, education etc.

Now what you see in front of you is the net worth statement of Alex and John as of today. You could also group your asset classes as we discussed earlier that is, equity, debt, liquid, gold and real estate. Currently, Alex, and John have a home loan and a car loan which has been included in the liability section. Total assets subtracted by the total liabilities that is the net worth of the Alex and John.

As of Today	Alex	John	Total
Assets Equity Debt Liquid Gold Real Estate	1,00,000 6,40,000 1,00,000 1,00,000 30,00,000	2,00,000 12,40,000 2,00,000 0 30,00,000	3,00,000 18,80,000 6,00,000 1,00,000 60,00,000
Total Assets	39,40,000	46,40,000	85,80,000
Liabilities Home Loan Car Loan	10,00,000 50,000	10,00,000 50,000	20,00,000 1,00,000
Total Liabilities	10,50,000	10,50,000	21,00,000
Net Worth	28,90,000	35,90,000	64,80,000

So we have seen what is net worth today, it is nothing but your assets subtracted by liabilities. We have also discussed about the asset types and we have also seen a sample net worth statement. Hope you now know how to check your financial status at a given point in time with the help of cash flow statement and the net worth statement.