Some people figure their net worth in a furtive moment, dreading the awful reckoning as if they feared that either a wrathful God or an overeager insurance salesman were peering over their shoulder. In fact, the impulse to sum up your financial situation is a healthy one. A systematic calculation of net worth is a good first step toward getting control of your financial life.

Your bank has elaborate forms that it produces, say, when you apply for a mortgage. But if the calculation is to be approximate and for your information only, you can do it easily yet comprehensively by using the form on the opposite page. In most cases, you will find that you are worth more than you thought. If so, you can plan new ways to make your assets work for you. Should your worth be less than you expected, you will need to rethink your personal financial strategy.

Professional money managers believe that the net-worth figure can be a help in setting some specific money goals: perhaps you should decide to start a savings program, set up an investment plan, or opt for buying a house instead of continuing to rent. Once you know your present worth, you should establish net-worth goals for the future and keep a careful record of yearly progress. Many professionals consider a 10% annual increase in net worth appropriate for average families.

Before you start to value and add up your assets and liabilities, you should consider what you want to find out. Literally, net worth consists of exactly what you could get in cash for your assets, less your liabilities, at a given point in time. Normally, that point in time is the present. But you might instead be interested in finding out what your estate will be worth to your survivors, and this calculation could change some values. You might also be curious to learn what you will be worth when you retire, or if your Aunt Jennie leaves you her millions. You could label one calculation “What I’ll be worth ten years from now if fortune smiles on me.” Another might be headed “What I’d be worth next Thursday if we decided to move to Australia.” To find out what you are, might or will be worth, simply make the computation several times, substituting figures appropriate to the circumstances.

If you happen to have $3,500 to spend, you can get a computer to do the calculations for you. For the past two and a half years, a team at the New York brokerage firm of Donaldson, Lufkin & Jenrette, Inc. has been working out a computer program that can show a client what would happen to his finances under a wide range of conditions and can calculate the results of current decisions projected ten years ahead. The service is most often purchased by corporations for top executives. Despite net worths of $100,000 to $10 million, these men are often badly organized in their personal finances.

Specialists in the management of personal wealth have learned that there are some mistakes even seasoned businessmen make when they appraise their assets and liabilities. “One client of ours likes to say that his stock is worth $2 million,” says a partner in a major New York accounting firm. “True, he’s not exaggerating about the value of the stock, but if he sold it, he might have to pay as much as $800,000 in taxes. To figure his net worth, both sums would have to be considered.”

Some other common mistakes in calculating net worth: Failing to include retirement or pension plans and other benefits. Your firm’s personnel department may be able to give you an estimate of the present value of your pension and perhaps help you figure out the potential worth of stock options, if and when you are eligible to exercise them. In any case, they should be able to tell you how much your profit-sharing or thrift plan amounts to and roughly what your pension will be at the time you retire.

Appraising property at replacement rather than market value. Bankers and accountants take a stony view of the value of cherished possessions — houses, stocks or collections of snuff boxes. They have to ask, “How much would be realized from the immediate sale of this property?” Their approach is almost certain to disillusion the man who prefers to value his snuff boxes at what they would be worth to just the right fellow snuff-box connoisseur. Even the value of a house depends somewhat on how much time is available for selling it.

Suppose that after estimating your net worth you decide that you need some good financial advice and maybe a professional money-management program. You should remember that financial counselors can be divided into two major groups, those who sell advice and those who give it away. Unfortunately, there is no guarantee of impartiality. Those who give it away, like bankers, stockbrokers and insurance salesmen, can afford to do so because they are selling services that they are probably advising you to buy. Investment advisers and other professional money managers may also have a preconceived solution to your financial needs.

Some investment services specialize in accounts ranging from $5,000 to$100,000. Their fees run from 2% on the smaller accounts to a fraction of a percent on the larger. For many middle-income families, purchased advice may cost more than it is worth. A firm charging 2% would have to make your portfolio earn more than 8% just to better the 6% long-term savings account that your banker might recommend for nothing. But your banker may be hard to see for more than perfunctory advice. An officer of a big Midwestern bank explains, “To get the attention of the bank’s experts, you have to be worth more than $100,000.” As an alternative, the financial counseling services of the right accountant or lawyer may be a good buy, since fees can be as low as $25 an hour.

Figuring your own net worth makes sense whether or not you plan to go on to seek outside counsel. If you continue to manage your financial affairs on your own, you will have a good bench mark for measuring where you are and where you are going. If you solicit advice from others, you will be able to appraise their suggestions better—and for the very reason that you are able to discuss your situation with precision, the advice itself may be of better quality. — Robert M. Randall

The two columns of this form are for adding up what you own and what you owe. Made annually, this calculation will show whether you are gaining or slipping financially. Items on the form are positioned to show how some categories of assets and liabilities correspond. The form should be studied across-for instance, do you have enough cash to pay current bills and still cover emergencies? It should also be read up and down – are your assets unduly concentrated in just one category.