If you want to make your financial plan count, every year or so, you need to count your money.

By “counting your money,” of course, we mean coming up with a personal balance sheet or net worth statement. That annual snapshot of your assets and liabilities can help you identify where you are on the road toward your personal financial goals and pinpoint obstacles that might be getting in your way.

Figuring your net worth is easy: You tally your assets and your liabilities and subtract the latter from the former. While it's easier with a simple spreadsheet program, you can certainly do it by hand.

But oddly, most folks never get around to figuring their net worth.

You could call most people in the middle of the night, ask them their checking account balance, and get an answer within $100 or so of the actual amount. But some of these same individuals do not know their net worth, which is a much more important number.

Here’s how to go about finding that important number.

Tally Your Assets

Your assets are the things you own, from your blue chip stocks to the change in your pockets. So go through your files—and empty out your wallet—and calculate your worldly goods.

One area to pay attention to is your collections: antiques, artwork, jewelry and so forth. If you have never had your collections appraised, completing your net worth statement should prompt you to do so. And, if you have never had them insured, this process is a good reminder to get that done, as well.

This is also a good time to consider your heirs and put your financial house in order. As you’re going through your files, update your list of what you own and where it is. That will keep the executor of your estate from racking up billable hours chasing down rumors of a second safety deposit box and make sure your nephew doesn’t unload your Gustave Stickley rocking chair for $30 at a garage sale.

What not to include: Social Security and pensions that will be paid as annu-ities or income streams. And don’t include your assets of future value—things like pension plan or Social Security death benefits, life insurance policies or Veteran Administration benefits. For this project, look at current
assets—your accumulated wealth—only.

Now pause for a moment to savor that big number before you go on to…

Total Your Liabilities
Your liabilities are the things you owe, from the mortgage on your vacation home to the balance on your platinum card to the $20 you promised Larry in accounting you’d throw into the pot for the VP’s retirement gift.

This process forces you to sit down and consider your total liability instead of just your next month’s credit card bill.

Find the Bottom Line

• Check your diversification to make sure you’re not sitting on too much cash.
• Weigh your comfort level with your liabilities. Ensure that your debt hasn’t crept up too much.
• See how much your net worth has grown or shrunk in the past 12 months.

Now file your net worth statement away until it’s time to check it again in a year or so.

Many people like to use their year-end account statements to figure their net worth annually. If you have accom-plished some of your major financial objectives—perhaps accumulating your first million and eliminating your credit card debt—every two years is probably often enough for an update. You may want to check your progress more often, though, if you are work-ing on a specific goal, like paying off the mortgage.

And if you find yourself updating your net worth every day before lunch, back off. Perform a checkup too often, and your statement becomes deceptive. Because at that point, your net worth is just swinging with the financial markets.

The Bottom Line on Your Bottom Line

However often you choose to figure your net worth, your personal balance sheet can help you make sure you’re on track to meet your financial goals—or figure out what’s causing you to get stuck.

If you are going to manage your wealth, you need to measure it. Click here for more information on saving and investing.