The Beginning

Are you lost wandering around in the financial wilderness? Before the journey to Financial Independence can begin, you must figure out where you are starting from. The first step is to create a net worth statement. If you were to convert everything you own to cash and pay off all debts, how big of a pile of money would you have? No need to get fancy a pencil and a piece of paper are all you need.

Creating a net worth statement is a powerful financial tool that provides you with a snapshot of your overall financial health. It helps you understand your current financial position by calculating the difference between your assets (what you own) and your liabilities (what you owe). Here's a step-by-step guide on how to create a net worth statement:

Step 1: Gather your financial information
Start by collecting all relevant financial information, including bank account balances, investment account balances, real estate properties, vehicles, retirement accounts, loans, credit card balances, and any other debts you owe.

Step 2: Total your assets  
Create a list of all your assets, which are the items or properties with value. Include cash in bank accounts, investments (e.g., stocks, bonds), real estate properties, vehicles, valuable possessions (e.g., jewelry, art), and any other assets you own. Write down the estimated value of each asset next to its name. Add up the estimated values of all your assets to calculate the total value of your assets. 

Step 3: Total your liabilities
Create a list of all your liabilities, which are your debts or obligations. Include items such as mortgages, student loans, credit card balances, personal loans, and any other debts you have. Write down the outstanding balance or amount owed for each liability. Add up the outstanding balances of all your liabilities to calculate the total amount of your liabilities. 

Step 4: Calculate your net worth
Subtract the total amount of your liabilities (Step 5) from the total value of your assets (Step 3). The result is your net worth, which represents the difference between what you own and what you owe.