48. How To Calculate Your Net Worth In 5 Minutes

All right, let's go. All right, so, folks, this is going to be how to calculate your net worth in five minutes. Really easy to do. And again, this is not financial advice. This is a kind of quick and dirty back of the napkin to see where you are financially positioned. Don't make any decisions based off this. Please go and see your financial advisor or strategist or someone that is qualified before you make any decisions. All right, let's get into this. So this is very, very simple. If you're listening on the podcast, grab a four sheet of paper, draw two lines down it. So you got three columns. In the first one, you're going to write assets. Middle column, you're going to write liabilities. Third column, you're going to write equity. This is just the basic accounting equation. To do a balance sheet, assets plus liabilities equals equity. All right, let's go through it. So we're going to write down your assets. Your assets might be different to the ones that I list here, but I'll go through the main asset class classes and you can write them down. All right, so let's go with assets. Let's say you've got a house, and it's worth half a million dollars, right? $500,000 in the assets column. And let's say you have a mortgage against that property. The mortgage is $400,000. So either you paid off 100 grand there, or your house is appreciated by 100 grand in value. So the equity that you hold is $100,000, and you write that in the far right column. So assets, house, 500 grand. Liabilities, mortgage, 400 grand. The equity you have is 100 grand. All right, let's say you've got superannuation or a 401k at $100,000. The liability on that is zero. We're not going to factor in tax here. So the equity that you have is another $100,000. All right, let's say you got a car. Your car's worth 20 grand. Good on you for not over capitalizing on your car. Good on you, fam. Let's say you've got a $10,000 loan against that car. So in the assets column, you've got 20 grand for your car. In your liabilities, you've got $10,000 for the loan. So the equity you have is $10,000. And what we're doing here in the assets column is your assets are generally stocks, bonds, currencies, and commodities. And assets are anything that you can turn into cash so you can sell your car you can, you can access your super for cash and you can sell your house.

Now, let's say you have a student loan. At the moment, the asset on that is zero. Let's say you've spent all the money. The liability is 30 grand. And let's just say this, this is actually a student loan. Let's just call it student debt. So you've gone into uni and you've got 30, $30,000 worth of debt. And the asset, your actual diploma is worth $0. You can't take that to a pawn shop and you can't sell it to someone for an amount of money. There are kind of intangible benefits because you've Learned. But look, asset, $0 loan, 30 grand. You actually have negative equity minus $30,000 from that student loan to pay off for your degree. Let's say you've also got some shares at 10 grand. Chuck that in the assets column. Liability, $0 because you bought that with post tax dollars. Equity is ten grand. And let's also say you got a Michael Jordan rookie card because you're fancy, but it's not the top one. It's only a $10,000 one. So you go through your collectibles, any gold you might have, bitcoin shares, bonds, write all that stuff down. Michael Jordan rookie card, $10,000 liability, $0. So your equity is 10 grand. All right? After you've done this, super easy sum up the columns. So if you add up all of your assets, your assets are worth $640,000. And you can even create a pie chart from this. You'll see your house is far and away half a million dollars worth of assets there. But you've also got your super, you've got your car, you got your shares and your Michael Jordan rookie card. Add up your liabilities. If you add up what you owe against that, the 400 grand mortgage, the, the car loan, the student loan, that's $440,000. Assets plus liabilities, that's actually minus $440,000. Your net equity or your net worth is 200 grand. It is that easy to calculate. And the amount of my friends that have even done MBAs that haven't done this for themselves to see their financial position. And again, this is just a snapshot in time. I recommend everyone does this because it'll be so eye opening as to what you actually own, what you have and where the majority of your wealth is. Everyone should spend five minutes and do this exercise by themselves or with their partner to just see where they are in life and then contact the professionals and do some planning to get to where you want to be. There you go. Five minutes. Your personal networks.

Nice work. I remember you did that with me a couple of years ago, and I was like, oh, shit.

It was, it was astonishing for you because you were a business owner, so you got to see how much of your money was in the business, but that was highly illiquid. But then your liquid funds, with your crypto and a few other things, you got to see what you could access and where your capital actually was. And it'll be, it'll completely change for different stations in life. Like your super will go up significantly when you're in your 50s has been compounding year after year or the investments that you have. It's just a brilliant exercise that everyone needs to do and take five minutes out of their life to do.