Friday, June 29, 2007

Net Worth / Lifetime Earnings x 100

The formula for your "wealth score," that is. Basically a measure of "what has my money accomplished for me?" Despite my recent stagnation, we're really not doing that bad for ourselves. I keep track of our "wealth score" in an excel spreadsheet and update it every two weeks or so. I just updated it tonight (since I paid bills and moved money around and such), and our wealth score is 20.08. The "ideal" wealth score for people in the 20-35 age bracket is 0-25. Rawk on.

I suggest you give it a whirl - it's really a good measure of your financial health. You just add up everything major you own: home value, car values, checking and savings accounts, 401K plans, etc. That's your assets. Then you add up your debt: mortgage, loans, etc. That's your liabilities. Subtract your liabilities from your assets, and you get your net worth. Then divide that by your lifetime earnings (available from your social security statement that you get once a year, or your tax returns if you have them) and multiply by 100 to get a percent. If it's positive, you're in decent shape! If it's over 50, give me a call because I have some things I'd like you to buy me.

I use Zillow for home value estimates, Kelley Blue Book for car value estimates, and HSH's amortization calculator to keep a running tally of our current mortgage balance. Everything else comes from our account statements.


Eric said...

i had never heard of zillow before. that's pretty neat.

Courtney said...

Zillow is AWESOME.