FMS – Part 1 – Net Worth Statement

Welcome to Handful of Thoughts Foundational Money Series (FMS).  This is Part 1 – Net Worth Statement of the 3 part FMS.  The intent of this series is to help you get started thinking about your money.  If you don’t know where to start – this is the place.

The first step in thinking about your money is knowing where you are currently.  As an analogy, if you are planning a vacation and only have a week off, where you go and how you get there depends on where you are starting from.

Financially, this starting point is a net worth statement.  A net worth statement is a snapshot of your current financial picture.  There is no judgment involved with a net worth statement because creating one is strictly about gaining information. 

Net Worth Statements

The first time you calculate your net worth it doesn’t matter what the final total is – just that you calculated it.  If you have never completed your net worth statement then you may or may not have any idea where you are starting from.  

Your net worth is a place marker on a map, where you go from there is up to you.  Continuing with the vacation analogy, are you starting from Vancouver, Edmonton or Toronto?

I calculate my net worth every 6 months, some people calculate it more frequently. Six months is a good interval of time for me to see changes occurring. I would suggest completing your net worth statement annually at the very minimum and monthly at the maximum.  Completing your net worth statement too frequently will just be time-consuming without gaining too much new information from the previous calculation.

Just a number

Your net worth is not a number to get emotional about or obsess over – it is just a number.

There are a lot of articles online stating that your net worth should be this or that by this or that age.  I disagree. We are all on our own journeys – the important thing is to see progress.  Who’s to say where the best vacation spot is and when you should visit it?

To complete your net worth statement you will need to know the value of all of your assets and liabilities. 


Your assets are anything of value that you own or partially own.  

Examples of assets to include:

  • Real Estate
    • Principal residence
    • Rental Real Estate/Income Property
    • Vacation property
  • Land
  • Vehicles
    • Cars/Trucks etc.
    • Boat
    • Recreational vehicles
    • Campers/trailers etc.
  • Expensive Jewelry
  • Collectibles/Antiques
  • Cash
    • Savings accounts
    • Chequing accounts
    • Piggy Bank
    • Wallet
  • RRSP’s
  • TFSA’s
  • Investments
    • Stocks/Bonds
    • Mutual Funds
    • ETF’s/Index Funds
    • Private investments
    • GIC’s
    • Canada Savings Bonds
    • Annuities
  • Pension

Asset Considerations

Your principal residence is included even if you have a mortgage.  The mortgage amount will be represented later in the liabilities section.  If you are a renter then you would not include a property value in your assets (or liabilities) column.

When calculating your pension as an asset there are a couple of different ways of doing it.  The commuted value is the current market value of your earned pension.  The estimated value is the estimate of the value your pension will be when you decide to begin drawing it down.  It doesn’t matter which value you use as long as you are consistent with the value choice each time you calculate your net worth.

I typically do not include home furnishings, appliances, and electronic equipment.  This is for 2 reasons.  1 – In my opinion, the price of these decreases frequently over time.  I do not want to spend the time trying to accurate asses their value. And 2 – Nothing I own in those categories is of real value. 

However you may own some home furnishings, appliances or electronic equipment of value – then, by all means, include them in your assets.  If you are planning on including them, realize that their value is not static and in the future, their values should be adjusted.  Make sure to do your research to adequately value them – don’t just write down what you think they are worth.


Your liabilities are what you owe – all your debts and financial obligations.

Examples of liabilities to include:

  • Credit card balances
  • Medical bills
  • Back income taxes
  • Back property taxes
  • Legal debts
  • Child support
  • Alimony
  • Mortgages
    • Principal residence
    • Income properties
    • Land
    • Vacation property
  • Loans
    • Home equity (HELOC)
    • Bank 
    • Vehicle 
    • Educational/ Student 
    • Finance company
    • Life insurance
    • Personal
    • Retirement accounts
      • First time home buyers plan

Sometimes calculating your liabilities seems daunting – but remember it’s just a number.  It does not represent you as a person – just where you currently are financially.  For some of your liabilities – for example, real estate – there will be correlating values in your asset column.

Calculating Your Net Worth

Once you have listed all of your assets and liabilities, you add up all your assets and subtract all your liabilities.  The result is your current net worth.

If your net worth is negative right now that’s okay – we are all starting somewhere. Not everyone begins their vacation from Toronto.  By calculating your net worth periodically, you will start to see progress towards your financial goals.  If the next time you calculate it you are still negative but are making progress then that’s the important thing.

The journey of a thousand miles begins with one step

Lao Tzu

When I first started calculating my net worth there wasn’t much progress between each calculation. Eventually, I started making some bigger steps.  This is due to the beauty of compound interest.  Zach over at Four Pillar Freedom explains how the first $100,000 is the hardest and most time-consuming.

Not only is a net worth statement good for knowing where you are, if you have a positive net worth it is also good for taking to a bank or lender if you are looking to get a loan. Just keep in mind any new loans you get will have to be eventually represented in your liability column.

How to calculate your net worth

Net Worth Statement Considerations

There can be many different ways of calculating your net worth.  Don’t get too caught up in this method or that method – just use the same method every time. If you are including a line item one time then include it every time. Keep it simple and consistent. Consistency will help in preventing inflation of your numbers.

With all the small differences in calculating net worth, comparisons can be inaccurate and difficult.  See why having such and such net worth by a certain age isn’t important?

When calculating my net worth, I use present values at the time of calculation.  For example, what is the present value of my principal residence (not what I think it is worth)? What is the present value of my RRSP (not the future or discounted amount eventually after taxes)?  As long as I use the same method every time I complete my net worth statement I can compare one calculation to the next.  

Take some time to complete your net worth statement.

What’s your financial starting point?

6 thoughts on “FMS – Part 1 – Net Worth Statement”

    1. That is the best thing about personal finance and financial independence, it is personal and individual. If you want to spend your money on a boat, that is completely your choice. As long as it aligns with your goals and values I think that’s awesome.

  1. Stating one’s total pension worth over 20 or 30 yrs. only makes sense if one is planning to nominate inheritors. (and I don’t have children.)

    Otherwise one can only access it the next month. The money is never accessible more than that ahead. I’ve been in discussion with other Canadian retirees where alot of them feel it’s pointless to include pension commuted value, in net worth.

    1. Including the commuted value of your pension can make sense before retirement when that is still an option. But you’re right. During retirement, it doesn’t really make sense. Personally, I plan on commuting my pension because I won’t be working long enough to make my pension make sense long term. So, I’ve always included the commuted value.

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