A Parent's Guide to Calculating Assets (Guest Submission)
As a busy parent, you know how hard it is to find time to sit down and “crunch the numbers” to determine your family’s financial situation. That being said, knowing exactly how much you have (and how much you owe) is tremendously important for both short- and long-term financial planning. If you want to secure your family’s financial future, start by calculating your assets. Keep reading to learn how to get started.
How Much Is Your Household Debt
During the first fiscal quarter of 2018, Household Debt in the U.S. equaled $13.2 trillion. Household debt refers to the amount of money a household owes to other people or institutions in the form of all liabilities (car loans, mortgages, credit cards, student loans, medical bills etc.). To know what you owe, start by creating a list of all debts and respective interest payments. While you are creating this list, you may notice some areas where you can save money. For example, you may realize that if you simply paid $30 more a month on your car loan you could save hundreds of dollars in interest. Because your home is likely the largest contributor to household debt, it is important to know its true value as well as how to leverage this value effectively.
How Much Is Your Home Worth?
While your home is likely the largest single-ticket contributor to your household debt, it is also one of your greatest physical assets. Knowing what your home is worth can help you obtain loans, negotiate property taxes, and set a listing price. Your home’s value can also be leveraged to help your children through their education. For example, taking out a home equity loan can help pay for college tuition. If you want an approximate estimate of your home’s value, there are a number of online resources to help.
You can also estimate your home’s value by comparing it to listing prices of similar homes in your area. If you want a more accurate estimate of what your home is worth, consider reaching out to a local real estate agency. The majority of agencies have designated individuals who can calculate the true market value of your home. These individuals may also make recommendations for increasing your home’s overall value. Maybe you can improve your market value simply by adding a fresh coat of paint and some new carpeting. If you know your home’s value, you will be better able to make positive financial decisions.
How Much Do You Make?
While your home is likely your largest physical asset, it can be argued that the most important asset is your household’s earning potential (aka net income). Net household income refers to how much money is earned -- salary, investments, rental units, retirement funds etc. If it puts money into your pocket, be sure to factor it into your net income. Knowing your net income can help you create a spending budget, guide investments, and determine how much you can/should be saving. Basically, your net income is the amount of income coming in minus the amount you have owing. Knowing what you make can help you plan for the future and identify areas of overspending.
Figuring out your assets is the practice of determining what you have as well as what you own. Investing in your family’s future means having a clear picture of your financial situation and using it to make educated financial decisions. If you know your assets, you are well on your way to making meaningful, positive financial decisions for yourself and your family.
About the author: After losing her husband Greg, Sara Bailey created TheWidow.net to support her fellow widows and widowers. She is also the author of the upcoming book, Hope and Help After Loss: A Guide For Newly Widowed Parents. Sara lives with her two children in Dallas, TX.
Note: Some of the links contained above are US-based. Out of respect to the author's wishes, they have not been modified, so they will provide no useful information here in Canada. Get a local realtor to contact you should you wish to get advice for your Canadian home property values. "Free" appraisal websites are little more than lead-generators, so you may be far better off paying the appraisal fee.