How to Determine What You Are Worth

Do you think you are wealthy enough? You think you already have an abundance of material possessions. May be you already have one Honda Odyssey and one BMW 750, one  house in Toronto and  one bungalow in Muskoka, you have three bank accounts, but you also have mortgage loans, car loans and four different credit cards. You need to understand that wealth is not what possessions that you have, but is how much net possessions you have. In economics, the term wealth means the net worth of a person, household, or nation, that is the value of all assets owned minus of all liabilities owed at a point in time.

A simple net worth statement consists of the following categories.

Investments

Bank accounts, mutual funds, common and preferred stocks, municipal bonds/corporate bonds, investments in real estate, miscellaneous investments.

Assets

Residence, automobiles, collectibles, other personal property

Retirement and Child Education Assets

RRSP investment, RESP investment

Liabilities

Home mortgage, automobile loan, investment loan, line of credit, other loan, credit card debt, other debt

The formula is simple:

Net Worth = Investments + Assets + RRSP + RESP – Liabilities

But remember when you calculate your net worth do not include your personal items like clothes, CD, furniture, only count those items that have monetary or significant value.

Now after you finished your net worth analysis, you need to understand the meaning of the result.

If your net worth is negative it means your debt exceeds your assets, so you need to focus managing your money and reduce your debt levels.

If your net worth is less than one or two times your annual income, you are not in bad situation. Example your annual income $ 48,000, but your net worth is only $ 60,000 (1.25 times your annual income), it's still good, but you need to manage your debts and saving more.

You can visit TD Canada Trust website to help you calculate your net worth with net worth calculator online.

Some facts about wealth that  the total household wealth in the world has been estimated at $125 trillion (USD 125 x10¹²) in year 2000, and about 90% of global wealth is distributed in North America, Europe, and "rich Asia-Pacific" countries (not including India).  

Based on Statistics Canada data in 2005, the total Canadians net worth is $ 4.86 million. From 13.6 million family units, 6.5% has negative net worth, 15.5% with net worth up to $ 15,000, 20.5% with net worth $ 15,000 - $ 100,000, 35.6% with net worth $ 100,000 to $ 500,000, and 21.7% with net worth above $ 500,000. So in general almost 60% of Canadians have net worth above $ 100,000.