Should You Include Your Car in Your Net Worth? How to Value 9 Things You Own
Yes, your car belongs in your net worth. It's something you own, so it goes on the asset side at what it would sell for today. If there's a loan on it, the loan goes on the debt side.
The harder question is what else to count. Jewelry, furniture, a camera, the equipment in your studio: all of it cost real money, and almost none of it is worth what you paid.
Here's a simple test for deciding what goes on the list, and how to put an honest figure on nine common things you might own.
Every line at what it would sell for, not what it cost. Example data.
The short version
Count something if you could sell it for a meaningful amount and you'd notice it gone.
Use what it would sell for today, never what you paid.
List any loan against it separately, as a debt.
Leave out everyday household things. They add noise, not information.
A simple test for what to count
If you're unsure about something, ask yourself two questions.
Could I sell this within a month for $1,000 or more?
Is there a real market for it, with prices I can look up?
If the answer to both is yes, it goes on the list. Anything else is part of your life, and it doesn't need to be part of your net worth. The $1,000 line is only a suggestion. Pick your own number and keep it the same every time.
Nine things, and how to value each one
What you own | Count it? | How to value it |
|---|---|---|
1. Your car | Yes | A private-sale price from a used car guide, for your mileage and condition |
2. A second vehicle, boat or trailer | Yes | The same way, and lean on the low side |
3. Fine jewelry and watches | If they're significant | What a dealer would pay you, which is well below an insurance appraisal |
4. Business equipment | Yes, on the business side | What it would sell for used, not what it cost and not its tax value |
5. Art and collectibles | Only if there's a real market | Recent sale prices of the same or similar pieces |
6. Furniture and appliances | Usually not | They resell for a small fraction of what they cost |
7. Clothes and handbags | Usually not | Unless a specific piece has a known resale price |
8. Electronics | Usually not | They lose value fast |
9. Money you're owed | Yes | What you realistically expect to collect |
The car, worked through
Line | Amount |
|---|---|
What she paid three years ago | $28,000 |
What it would sell for today | $17,500 |
What she still owes on the loan | $14,200 |
What the car adds to her net worth | $3,300 |
The car goes on the asset side at $17,500, and the loan goes on the debt side at $14,200. The $28,000 she paid doesn't appear anywhere. It's history.
Notice how small the result is. A car that feels like a $28,000 asset adds just $3,300 to her net worth. That's not a reason to leave it off. It's exactly why you should put it on, because it corrects a picture that was too generous.
If you owe more than the car is worth
Both lines still go in, and the car lowers your net worth. A car worth $15,000 with $18,000 owed on it counts as minus $3,000. That's uncomfortable, but it's accurate, and it improves every month you make a payment.
Why insurance values can mislead you
An insurance appraisal tells you what it would cost to replace something at retail. What you could actually sell it for is a different, much lower number. For net worth, the selling price is the right one, because net worth asks what you have, not what it would cost to buy it again.
Business equipment sits on the business side, at what it would sell for used. Example data.
Business equipment is a special case
A stylist's chairs, a photographer's cameras and a baker's oven all have real value. But three different numbers can be attached to each one, and only one of them belongs here.
Number | What it means | Use it for net worth? |
|---|---|---|
Cost | What you paid | No |
Tax value | What you paid, minus the depreciation you've claimed | No |
Resale value | What a buyer would pay for it used | Yes |
Equipment you've fully written off for tax can still be worth thousands to a buyer. And equipment you bought last month may already be worth a third less.
How often to update the values
Once a year is plenty for things you own. Cars and equipment lose value slowly and steadily, so updating them every quarter adds work without telling you much. Update loan balances every quarter, though, because they change with every payment.
Three common mistakes
Using what you paid. It's the most common mistake, and it always makes the picture look better than it is.
Counting everything in the house. A long list of small guesses makes the total less reliable, not more.
Forgetting the loan. An asset without its debt is only half the story.
Put the lines in, free
This is what the Net Worth Tracker is for. La Soglia, the free membership of the Money Mastery System, holds your car, its loan, your home, your business and everything else you own and owe in one place, with no bank connection and no card. For the full list of what belongs on each side, see what counts toward net worth. For the biggest line of all, see how to count a house and a mortgage.
Bring it to the Collective
Not sure whether something belongs on your list? Ask in the Money Mastery Collective. The discussion feed is open on the free membership.
Questions we hear
Is a car an asset in net worth?
Yes. List it at what it would sell for today, and list any loan on it separately as a debt.
Do I include furniture in my net worth?
Usually not. Furniture and everyday household things resell for a small fraction of their cost and add little to the picture.
How do I value jewelry for net worth?
Use what a dealer would pay you, not an insurance appraisal, which reflects the cost of replacing it at retail.
How do I value business equipment?
At what it would sell for used. What it cost and its value for tax purposes are different figures.
References
There are no outside figures in this post. Every number is our own worked example.
Start free with La Soglia
La Soglia is the free membership of the Money Mastery System. It gives you the Net Worth Tracker, where everything you own and everything you owe sits in one place, and the Money Mastery Collective. There is no card to enter and no bank connection.
Keep in touch
Donna shares a short version of posts like this one on Instagram and LinkedIn. Follow along there, or find everything in one place on our links page.
A note on what this is
This article is educational. The Money Mastery System is an educational tool, not financial software, and nothing here is legal, tax, investment or financial advice. The figures are illustrations, and what something would sell for depends on its condition and market. For guidance on your own circumstances, please speak with a qualified professional who knows them.
Comments