Most families are surprised when they see their personal net worth statement documented for the first time. Often, total net worth is larger than they had thought. As we go through life, we tend to collect many possessions which fill our houses, garages, and closets. Similarly, with our financial lives we collect accounts, assets, and debts and never put in the effort to see how the puzzle fits together and how to best build a financial plan.

The following are 10 reasons why you not only should, but why you need to make this a priority in your financial life.

1- It provides a foundation for reviewing financial health with a spouse.

Most relationships have one spouse in control of the financial picture, while the other defers the effort due to lack of interest or perceived lack of capability. Having one map to read from helps couples navigate financial decisions together.

2 – It can help you see areas in your plan where simplification and consolidation can benefit you.

Previous employer 401(k)s, bank CD IRAs, old savings accounts, and other financial accounts can overly complicate a financial picture, increase difficulty of decision making on where to save, and increase costs of your financial plan substantially. Seeing everything together can help provide clarity on where simplification makes sense.

3 – It provides perspective on all assets and liabilities to ensure that ownership and beneficiary details are up-to-date with a well-refined estate plan.

Completing any estate plan with your attorney is only half the battle. Your plan will not fully work unless it is hardwired with your net worth. You worked hard to document what should happen if the unexpected occurs, and a failure to align your assets might mean a larger struggle for those you leave behind.

4 – It gives you an on-demand financial picture to satisfy banks when making a big purchase or starting a business.

Loan documents and formal business plans are not complete without a full picture of all your assets and liabilities. When you maintain a net worth statement, you are telling a lender that you are fully prepared which can decrease the length of time it will take to gain any loan approval.

5 – It provides a point on your financial map that indicates, “You Are Here.”

When combined with your values and priorities, it helps you put your best foot forward when making comprehensive financial plans. It is hard to know where you’re going unless you know where you are now. For example, if you value saving for your child’s college education yet you fail to earmark the right assets and savings targets for that goal, you can put yourself further behind.

6 – It allows you to focus on asset growth, not income growth.

Too many people keep score with their W-2. What you do with your take-home pay matters more. The more progress you make eliminating debts and building assets will help to grow your net worth exponentially. A large house, fancy car, and other large purchases are okay as long as they do not hinder you from making progress on your overall net worth.

7 – It allows you to stop mentally segregating certain accounts and see everything in one clear holistic view.

Inheritance from Mom and Dad, a Roth IRA you started early in your working career, and a larger balance in your savings account all contribute toward one goal. Failure to see these working in unison can make your plan fragmented. A financial advisor who helps you realize this can help propel you forward while still ensuring you remember what got you here.

8 – It helps your financial professionals advise you to see the impact of small decisions on a bigger plan. Water dropped in a pond creates a ripple effect.

Imagine going to the doctor and asking them to only check your lungs and your liver. If you have an issue with your heart, this evaluation would be worthless. Maintaining a net worth statement helps all of your various professionals see the larger plan. An attorney needs to know your net worth for estate taxes and titling, financial advisors need to know how you’re saving and what you’re saving toward, an accountant needs to know what taxes might be owed within your plan, and an insurance agent needs to know what should be protected. All of this can be gleaned from a well-documented net worth statement.

9 – Consistent maintenance allows you to capture a history of progress with your plan.

Reviewing the impact of your decisions and seeing progress in your plan will help give you the confidence in designing your future. A careful evaluation of your net worth as your values and priorities change ensures alignment with what is important to you.

10 – It allows you to take a financial victory lap! It’s okay to be proud of your progress. Working hard and making comprehensive decisions should lead to good feelings.

A personal net worth statement can be challenging to establish and time consuming to maintain. The good news is that apps and software, like, can help with this process and provide a framework for budgeting. You can also lean on your financial advisor to help you document, maintain, and update this on a regular basis. A financial advisor can help serve as an accountability partner to make sure your personal Net Worth Statement is current and on-demand, establishing your financial life today and preparing you for the future.

Author Jakob C. Loescher Financial Advisor / Team Lead

In 2016 Jake was recognized by the Rockford Chamber of Commerce as one of 40 Leaders Under Forty. In 2023, for the sixth time in seven years, he was named on Forbes’ list of America’s Top Next Generation Wealth Advisors.

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