Net worth is one of the few numbers in personal finance that tells you the whole story. Not what you earn, not what you spend, but what is genuinely yours once everything you owe has been subtracted.

It sounds like something reserved for people with investment portfolios and a solicitor on speed dial. It isn't. One spreadsheet, set up in a spare twenty minutes and updated every so often, will do the job. The first time you see your own figure, you will probably learn something you didn't know.

What net worth actually measures

Your net worth is everything you own minus everything you owe. Assets on one side: current accounts, savings, investments, pensions, a car, a house. Liabilities on the other: mortgage, credit cards, loans, overdrafts, student loan balance. Take one from the other and you have the number.

A negative result is not a red flag on its own. A first-time buyer with a £140,000 mortgage and £12,000 in the bank will be well into negative territory, and that is a perfectly sensible place to be. So will a recent graduate with a student loan. The point of tracking is not to judge the figure you start with. It is to watch the direction it travels over the next year or five.

Setting up the spreadsheet in ten minutes

You do not need a template someone else built, and you certainly do not need software you pay for. A free spreadsheet is fine. Set it up like this:

• Put the date in a cell at the top of each column, so you always know which snapshot you are looking at.
• List your assets in one block, running down the rows.
• Leave a row for an assets subtotal.
• List your liabilities in a second block underneath, with its own subtotal row.
• Finish with one net worth row: assets subtotal minus liabilities subtotal.
• Add a second tab called History, where you type each date and the net worth figure. That is what you turn into a line chart later.

Adding each new snapshot

When it is time to update, insert a new column to the right of the last one, copy the previous column across, and change the values. The formulas come with it, so the subtotals and the net worth row update themselves. Keeping assets and liabilities in the same rows every time is what makes the History tab work.

Which figures to use

Assets

• Cash: the balance in each current and savings account on the day you check.
• Investments and ISAs: log in and use the current valuation, not what you paid in.
• Pensions: use the latest statement figure or the valuation shown in your provider's online account. Don't chase daily movements.
• Property: if you own, use a sensible estimate — a recent valuation, or a sold price for a similar home nearby. Update it once a year at most.
• Vehicles and other valuables: what the item would realistically fetch now, not what it cost.
• Money owed to you: only if you genuinely expect it back.

Skip the contents of your wardrobe and the furniture. Listing them takes time, the figures are guesswork, and they barely move the total.

Liabilities

• Mortgage: the outstanding balance from your latest statement, not the amount you originally borrowed.
• Credit cards and overdrafts: current balances, added together. Include the card you rarely use if it carries a balance.
• Loans and car finance: the outstanding balance, not the monthly payment.
• Student loan: check your online account. It is often the largest number on the page.
• Buy now, pay later and anything else outstanding: small balances add up faster than people expect.

The only formula you need

Two subtotals and one subtraction. If your assets sit in rows 4 to 10, the subtotal is =SUM(B4:B10). Do the same for liabilities, then point the net worth cell at one subtotal minus the other. That's the whole model.

A worked example. Assets: £1,200 in current accounts, £4,500 in savings, £12,000 in an ISA, £28,000 in a pension, £6,000 for a car. That is £51,700. Liabilities: £142,000 mortgage, £800 on a credit card, £9,000 student loan. That is £151,800. Net worth: minus £100,100.

Uncomfortable? Perhaps. But every mortgage payment reduces the liability and every pension contribution increases the asset, so the number moves in your favour with almost no effort. Seeing that happen month by month is the reward for setting the thing up.

Updating it without making it a chore

Pick a rhythm and stick to it. Monthly on the same date works well — the first of the month, or the day after payday. If that feels like too much, quarterly is fine. What matters is consistency, not frequency.

Set aside twenty minutes, work through your accounts in the same order every time, and stop when you reach the bottom of the list. Don't check investment values daily; markets wobble and the wobble tells you nothing useful. The quarterly trend does.

Two practical notes. First, keep account numbers out of the file — you don't need them, and they make the spreadsheet more sensitive than it needs to be. Second, store it somewhere you control, password-protect it if your spreadsheet allows, and back it up. A copy in an encrypted cloud folder is fine; emailing it to yourself is not.

Reading the trend, not the number

Once you have three or four snapshots, the useful information appears. Ask three questions:

1. Is the line moving in the right direction over three months, ignoring one-off events?
2. Which category changed most, and was that deliberate?
3. Are the liabilities shrinking at all, or just the assets growing?

A dip in a single month usually means a holiday, a car repair or a Christmas. Two quarters of decline with no obvious cause is worth investigating properly. So is debt that grows while savings stay flat.

Start with a single column

You do not need every account on day one. Open a spreadsheet, put today's date in the top-left cell, and list the four or five balances you can find in the next ten minutes. Add the rest next month. A rough net worth you actually track beats a perfect one you never finish.

If your finances are more complicated — you are self-employed, own more than one property, or are weighing up pension contributions against other priorities — it is worth paying for advice tailored to your circumstances. A regulated financial adviser can help with planning, and an accountant can help with tax. General guidance only goes so far.

The number itself is not the point. What you do next month, with the same spreadsheet, is.

Photo: JESHOOTS-com / Pixabay