Net Worth Report

The formula for net worth/equity is assets less liabilities. The assets must be valued at market or realisable values.

Periodically calculating the net worth of an individual, family, or company has the following benefits:

1. Provide a simple snapshot of their ‘true wealth’ at a given time.
2. Eliminates ‘fake wealth’, i.e. assets purchased/funded via debt (liabilities). Debt financing only increases net worth when the assets grow in value, and the debt/liabilities fall.
3.  Annually measuring net worth indicates the growth in wealth over the last 12 months. One figure summarises what the previous 365 days of working, saving, investing, operating a business, etc., have translated into.  
4. Provides an anchor point to calculate the net worth targets/goals for the next 12 months, five years and ten years.

The 2019/20 Australian Bureau of Statistics (ABS) report on Household Income and Wealth in Australia disclosed:

• Average net worth for Australian households is $1.04 million.
• Average disposable household income was $56,448 pa.
• 75% of households have debt. Of these households, 30% were servicing a total debt three or more times their annualised disposable income.
• Median family net worth is $579,200.