A net worth statement is a list of your assets and debts at a specific point in time. A net worth statement can offer lots of useful information in time for making RRSP contributions and other financial decisions.

Calculate your Net Worth:

Assets: chequing accounts, savings accounts, TFSA, RRSP, non-registered investments, GICs, etc. Also: your house, car (get the “black book value”), vacation and or investment properties, etc.

Liabilities: mortgage (your home and vacation/investment properties), personal loans, credit cards, student loans, car loans, etc

Add all your assets together and your liabilities together. Subtract your liabilities from your assets. This is your Net Worth.

Sometimes when you are just starting out (if you’re just out of university, for example) or when you just bought your house and the mortgage is high, it is possible to have a negative Net Worth. The goal is to pay down the debts and hopefully the assets will increase in value, increasing your Net Worth.

Annual updates help you track the percentage change in your net worth, and see how well you’re meeting your financial goals. It should be going up every year. You want your assets to increase and your liabilities to decrease over time.

You may want to increase your savings, pay down more of your mortgage, or pay off your debt. All of these things will increase your net worth.

From losing your job, to car/home repairs, to accidents, to illness and disability, an Emergency Fund is the best way to cover your butt in case of life’s problems.

How to start an Emergency Fund:

1. Decide how much you need. You should save 3-6 months of “Essential Expenses”. What are your “Essential Expenses”? Rent/Mortgage payment, Food, Car Payment, Minimum Debt Payment, etc Anything that you’d get into serious trouble if you didn’t pay. You may have cancel non-essential services (cell phone, cable, etc) until your back up on your feet.
2. Start Saving! Even $25 per pay check can go along way. Make the debit automatic from your bank account into a High Interest savings account. Don’t put into GICs or anything else where you won’t have good access to the money. But, don’t put the money somewhere where it’s too easy to access it, that will give you the temptation to spend it on non-emergencies.
3. Once you’ve reached your 3-6 month goal, you can stop the automatic payment if you like. But, when you’ve paid something out of the emergency savings, you should try and put that money back as soon as you are able.

Having an emergency account is an essential part of any Financial Plan. Start yours today!