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    Evaluating your Financial Situation

     For more information, please call us at 753-1521.

    Your Net Worth Statement

    A Net Worth Statement lists all of your assets and liabilities, with the excess representing your Net Worth. All assets should be included, such as vested balances in retirement plans and 401(k) plans, personal property, jewelry, and household items. Assets should be valued at the price you would obtain if you sold them now, not the amount you paid for them. 

    Community Bank & Trust's new MoneyLink product will help you determine your Net Worth and will prepare a net worth statement for you! By linking all your checking, saving, investment, retirement, credit card, and loan accounts to MoneyLink, and by manually inputting information on assets that you own, MoneyLink can then create for you a Net Worth Statement.

    To view your Net Worth Statement on MoneyLink, click on the "View Net Worth Statement" button from the "Accounts Overview" dropdown menu. Select the desired time frame (week, month, year) and you can view the change in your Net Worth along with a break down of all your assets and liabilities.

     

    Once you have your Net Worth Statement, how can you evaluate what it means? The following are questions to ask yourself when viewing your Net Worth Statement:

    Has your net worth grown by more than the inflation rate? 

    To make progress toward achieving your financial goals, your net worth should increase by more than the inflation rate. If you net worth is not growing, determine why. 

    What is your ratio of assets to liabilities?

    A ratio of less than one indicates you have more liabilities than assets and a negative net worth. If that is the case, take active steps to reduce your liabilities. This ratio should increase over time, which indicates you are reducing your debt.

    What is the trend in your liabilities?

    Review the amounts and types of debt you have. Mortgages are typically used to purchase items appreciating in value and are generally considered "good" debt. Credit card balances and auto loans are used to finance items that typically don't appreciate in value and should be kept to a minimum.

    What percentages of your assets are liquid and non-liquid?

    Non-liquid assets include items like your home, other real estate, jewelry, and works of art. Although they may increase in value over time, they can be difficult to sell quickly at full market value. Liquid assets, such as bank accounts and stocks, are more easily converted to cash. You want sufficient liquid assets to cover financial emergencies.

    How have your investments performed?

    Now may also be a good time to thoroughly analyze your portfolio's performance over the past year. Measure the performance of each investment, comparing it to an appropriate benchmark. This can help you identify portions of your portfolio that may need to be changed. Also, calculate your overall rate of return and compare it to your targeted return. If you actual return is lower than the return you targeted when designing your investment program, you may need to increase your savings or select more aggressive investments.

     

    Need help setting up your MoneyLink or creating your Net Worth statement? Our Officers are always available to answer your questions! Call 753-1521 and let us help you set up MoneyLink today!