Advice calculating net worth

[Nutria]

Hi,

I'm putting aside money each month for our children's 2015-16 parochial school tuition, and for my wife to go to JuCo. Natural, that money is an asset. But I know that the tuitions will need to be paid, even if they aren't (yet) a legal obligation.

So, when calculating my net worth, should I consider those tuitions as liabilities?

Thanks

[phantom]

I think you could include the future tuition as a liability or not according to your preference. If you're looking for a way to include the money you've saved as an asset without counting on it for other things, I think adding a liability for tuition is a perfectly reasonable thing to do.

I don't use an escrow account through my mortgage lender for property taxes, so I divide the amount I owe every year by 12 and move that amount to an savings account once per month. I include that savings account in my net worth calculations. I could probably count my future property taxes as a liability as you suggest, but I don't. I could also just remove the savings for my property taxes from my net worth. Sometimes, I do run the numbers like that.

In my opinion, there's not much right or wrong in calculating net worth for your own use. Run the calculation in whatever way answers the questions you want to ask. Just make sure you're consistent.

[Nutria]

I think you could include the future tuition as a liability or not according to your preference. If you're looking for a way to include the money you've saved as an asset without counting on it for other things, I think adding a liability for tuition is a perfectly reasonable thing to do.

That's what I've been doing, since I'm not a CPA, this isn't a publicly-traded company and the purpose of my NW calculation is to see what's "real" instead of to impress analysts & investors.

I don't use an escrow account through my mortgage lender for property taxes, so I divide the amount I owe every year by 12 and move that amount to an savings account once per month. I include that savings account in my net worth calculations. I could probably count my future property taxes as a liability as you suggest, but I don't.

I do that, too. Everything -- except retirement -- that I explicitly save for gets a corresponding liability (with small stuff going into "miscellaneous liabilities"). It seems like cheating myself if I don't.

Must be the residue of those accounting classes that I took 35 years ago...