What is Net Worth?
| Calculation |
|
| Net Worth = |
Assets - Liabilities |
Simple Example
| Assets |
Amount |
| Savings |
$10,000 |
| TFSA |
$25,000 |
| RRSP |
$35,000 |
| Home value |
$500,000 |
| Car |
$15,000 |
| Total Assets |
$585,000 |
| Liabilities |
Amount |
| Mortgage |
$350,000 |
| Car loan |
$8,000 |
| Credit card |
$2,000 |
| Total Liabilities |
$360,000 |
What to Include
Assets
| Category |
Examples |
| Cash & Bank |
Chequing, savings, emergency fund |
| Registered Accounts |
TFSA, RRSP, FHSA, RESP |
| Non-Registered |
Investment accounts |
| Real Estate |
Primary home, rental properties |
| Vehicles |
Cars, motorcycles, boats |
| Business |
Ownership stakes |
| Personal Property |
Jewelry, collectibles (significant value) |
| Other |
Cash value life insurance, inheritance expected |
Liabilities
| Category |
Examples |
| Mortgage |
Primary, HELOC |
| Car loans |
Outstanding balance |
| Student loans |
Federal, provincial, private |
| Credit cards |
Current balance |
| Personal loans |
Lines of credit |
| Other |
Money owed to family |
Valuing Your Assets
Easy to Value
| Asset |
Use |
| Bank accounts |
Current balance |
| Investments |
Current market value |
| TFSA/RRSP |
Statement balance |
Home Valuation
| Method |
Accuracy |
| Recent comparable sales |
Best |
| Automated valuation (Zolo, etc.) |
Good estimate |
| Property assessment |
Often low |
| Realtor opinion |
If selling soon |
Vehicle Valuation
| Method |
Source |
| Canadian Black Book |
canadianblackbook.com |
| AutoTrader listings |
Similar vehicles |
| Dealership trade-in |
Often low |
Personal Property
| Rule |
|
| Major items only |
$1,000+ value |
| Be conservative |
What could you sell it for? |
| Don’t count household items |
Usually minor |
Types of Net Worth
Total Net Worth
| Includes |
Everything |
| All assets |
Including home |
| All debts |
Everything you owe |
| Standard measure |
Most comprehensive |
Liquid Net Worth
| Includes |
Only liquid assets |
| Cash, investments |
Can access quickly |
| Excludes |
Home, car, illiquid |
| Best for |
Emergency readiness |
Investable Net Worth
| Includes |
Investments only |
| TFSA, RRSP, non-registered |
Financial assets |
| Excludes |
Home equity, personal property |
| Best for |
Investment planning |
Net Worth by Age (Canada)
Benchmarks
| Age |
Median Net Worth |
Target (Higher) |
| 25-34 |
~$50,000 |
$100,000+ |
| 35-44 |
~$235,000 |
$400,000+ |
| 45-54 |
~$520,000 |
$800,000+ |
| 55-64 |
~$700,000 |
$1,200,000+ |
| 65+ |
~$540,000 |
$1,000,000+ |
Statistics Canada data, includes home equity
| Calculation |
|
| Target = |
(Age - 25) × Gross Income ÷ 5 |
| Example |
|
| Age 40 |
|
| Income $80,000 |
|
| Target |
(40-25) × $80,000 ÷ 5 = $240,000 |
Calculating Your Net Worth
Step-by-Step
| Step |
Action |
| 1 |
List all assets with values |
| 2 |
List all liabilities with balances |
| 3 |
Total assets |
| 4 |
Total liabilities |
| 5 |
Assets - Liabilities = Net Worth |
Worksheet
| Assets |
Value |
| Chequing account |
$ |
| Savings account |
$ |
| Emergency fund |
$ |
| TFSA |
$ |
| RRSP |
$ |
| FHSA |
$ |
| RESP |
$ |
| Non-registered investments |
$ |
| Primary home |
$ |
| Other real estate |
$ |
| Vehicle 1 |
$ |
| Vehicle 2 |
$ |
| Other |
$ |
| Total Assets |
$ |
| Liabilities |
Balance |
| Mortgage |
$ |
| HELOC |
$ |
| Car loan |
$ |
| Student loans |
$ |
| Credit cards |
$ |
| Personal loan |
$ |
| Line of credit |
$ |
| Other |
$ |
| Total Liabilities |
$ |
Tracking Over Time
Why Track
| Benefit |
Details |
| Measure progress |
See growth |
| Stay motivated |
Celebrate wins |
| Catch problems |
Identify issues early |
| Plan better |
Set realistic goals |
How Often
| Frequency |
When |
| Minimum |
Annually |
| Better |
Quarterly |
| Optional |
Monthly |
| Method |
Best For |
| Spreadsheet |
Full control |
| Wealthica |
Automatic (free) |
| Mint/Credit Karma |
Bank account focused |
| Manual worksheet |
Simple approach |
Improving Net Worth
Two Ways to Grow
| Method |
Action |
| Increase assets |
Save and invest more |
| Decrease liabilities |
Pay off debt faster |
Strategies
| Strategy |
Impact |
| Automate savings |
Consistent growth |
| Pay extra on mortgage |
Build equity |
| Eliminate credit card debt |
Remove liability |
| Maximize TFSA/RRSP |
Tax-advantaged growth |
| Career growth |
Higher income |
Priority Order
| Priority |
Action |
| 1 |
Pay off high-interest debt |
| 2 |
Build emergency fund |
| 3 |
Get employer RRSP match |
| 4 |
Max TFSA |
| 5 |
Max RRSP |
| 6 |
Non-registered investing |
Common Questions
Negative Net Worth
| Situation |
Normal For |
| Net worth below $0 |
New graduates with student loans |
|
New homeowners with large mortgage |
| Action |
Focus on debt reduction + savings |
Include Pension?
| Type |
Include? |
| Defined contribution |
Yes (your account balance) |
| Defined benefit |
Optional (complex to value) |
| If including DB |
Use present value calculation |
Should I Include RRSP at Full Value?
| Approach |
Pros/Cons |
| Full value |
Simple, standard |
| After-tax value (~70-80%) |
More accurate purchase power |
| Either works |
Just be consistent |
Sample Net Worth Statements
Early Career (Age 28)
| Assets |
Value |
| Chequing |
$3,000 |
| Emergency fund |
$8,000 |
| TFSA |
$15,000 |
| RRSP |
$5,000 |
| Car |
$8,000 |
| Total |
$39,000 |
| Liabilities |
Balance |
| Student loans |
$18,000 |
| Credit card |
$2,000 |
| Total |
$20,000 |
| Net Worth | $19,000 |
Mid-Career (Age 40)
| Assets |
Value |
| Chequing |
$5,000 |
| Savings |
$15,000 |
| TFSA |
$95,000 |
| RRSP |
$150,000 |
| Home |
$600,000 |
| Car |
$25,000 |
| Total |
$890,000 |
| Liabilities |
Balance |
| Mortgage |
$380,000 |
| Car loan |
$15,000 |
| Total |
$395,000 |
| Net Worth | $495,000 |