How to Calculate Annual Worth

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Because the value of assets shifts daily or more often, annual worth is usually determined by the value of a person’s assets at any given point during a year. Annual worth is also referred to as “net worth” because it provides an estimated amount of money a person is worth if he liquidated all his assets. If you use a statement of annual worth to apply for a loan, remember that while unsecured debt is not deducted from the value of your assets, the bank will consider your amount of unsecured debt in the loan application.

Create a spreadsheet manually or in a spreadsheet software program that has “Description” in the first column and “Amount” in the second column.

Collect bank statements for all of your accounts for the date you’ve chosen to calculate annual worth and add each account and the ending balance in the account to your spreadsheet.

Gather statements for other financial investments such as stock, bonds, 401K, IRAs and other monetary forms of investment. Enter the description and ending value for each account into the spreadsheet.

Gather mortgage statements for any real estate owned. Estimate the value of each piece of real estate and subtract from that value the outstanding amount of any loans against that property. Enter the net value of all real estate owned into the spreadsheet.

Enter the estimated value of any fully-owned large-scale investments such as luxury cars, jewelry and high-end art.

Total all the items on the spreadsheet together to determine your annual worth. You can use this document for loan applications.

Tips

  • If you are part or full owner in a business, you need an independent business valuation in order to determine the worth of the business. You can then add your proportionate share of the business’ value to the spreadsheet.

    The end of the year is a good time to calculate annual worth since you will be gathering many of the same items needed to prepare your tax return.

    If you are not certain how to prepare a statement of annual worth, consider hiring an accounting or finance professional to assist you.