Net worth has an unfortunate ring to it, as though it belongs on a rich list. Strip the language away and it is a stocktake: everything you own, minus everything you owe.
Done once a year it tells you more than daily budgeting ever will, because it captures direction rather than detail. And it produces something else that turns out to matter more than the number itself, which we will come to.
What you own
Work through these and write down a figure and, crucially, who holds it.
- Current accounts and savings, including any cash ISAs.
- Investments: stocks and shares ISAs, general investment accounts, any shares held directly.
- Premium Bonds and NS&I products.
- Pensions. Every one, including old workplace schemes. This is usually the largest number on the list and the one people most often omit.
- Your home, at a realistic current value rather than what you hope.
- Any other property, including anything abroad.
- Vehicles, at trade value rather than sentimental value.
- Valuables worth insuring separately: jewellery, art, instruments.
- Business interests, if you have any.
Two common omissions. Defined benefit pensions have a real value even though they do not look like a pot, so use the transfer value or the projected annual income as a marker. And cash held in an old account you have not touched in years still counts.
What you owe
Shorter list, less enjoyable.
- Mortgage, with the outstanding balance and the date the current deal ends.
- Loans, including car finance and any PCP agreement.
- Credit cards, and be honest about whether the balance genuinely clears each month.
- Buy now pay later balances, which people routinely forget because they do not feel like debt.
- Overdrafts.
- Any tax owed, particularly if you are self-employed.
Doing the sum
Subtract the second list from the first. That is your net worth.
The number in isolation means very little. What it is for is comparison with the same number a year ago. Direction is the signal. A household with a small positive net worth that is improving is in better shape than one with a larger figure heading the wrong way.
If it is negative, that is common and not a verdict on you. Anyone early in a mortgage or carrying student debt may well be there. What matters is the trend.
What the exercise tends to surface
People rarely finish this without finding at least one of the following.
A pension they had forgotten. An account with more in it than they thought. A subscription or policy still billing for something they no longer have. Insurance cover that no longer matches the value of what it covers. A mortgage deal ending in a few months that they had not diarised.
Any one of those usually pays for the hour.
The part that matters more than the number
Here is what actually makes this worth doing. By the time you finish you have produced a complete list of everything you own, everything you owe and who holds each thing.
That document is precisely what your family would need if you were not there, and it is the single thing executors most often have to reconstruct from scratch. Building it as a side effect of a financial exercise is far easier than sitting down to build it for its own sake, because this version has an obvious selfish benefit.
Do not throw the working out. It is the most useful thing on the page.
Make it annual
Pick a date and keep it. The start of the tax year, a birthday, the same week each year. The first one takes an hour or two because you are assembling from nothing. Subsequent ones take twenty minutes, because you are updating figures on a list that already exists.
Where FamilySafe fits
FamilySafe is built to hold exactly this: what you own, what you owe, who holds each thing and the documents attached to them, updated as you go rather than rebuilt each year. And because you choose who sees what, the list you made for yourself is also the list your family would need.
This is general information, not financial advice. Speak to a regulated adviser about decisions relating to your own circumstances.
