Revealed: the secret that could help you retire YEARS early

WE arE used to keeping an eye on our bank balance, but are we looking at the big picture?

If not, you are missing the vital first step to transforming your fortune.

So today, ahead of our ‘ How to Get rich’ series launching this Saturday, we will show you how to create a clear idea of your true wealth.

Our brilliant daily pullouts will run all next week and explain how you can maximise your future finances.

Household names such as billionaire Sir richard Branson, Dragons’ Den star Deborah Meaden and TV property guru Phil Spencer will all share their secrets to getting rich.

But before you can start nurturing your wealth, you need to take stock and calculate what you actually have.

We all feel rich or poor at some time in our lives, but that may not be a true reflection of our actual financial position.

Checking if your house has gone up or down in value can help, and most people can easily find out how much money they have in their current and savings accounts.

However, few households know what their so-called net worth is. Simply put, this is everything you have, minus everything you owe.

and as you get older, your finances become more complex.

The lone bank account you had when you first started working has turned into a joint current account, mortgage, savings accounts, credit cards and investment Isa. and as soon as you start changing jobs, you begin leaving behind a trail of small pension pots.

Before you know it, you have lost track of your finances.

Carrying out a wealth assessment forces you to gather together information on your accounts and valuable assets in one place. By doing so, you can spot any imbalances and use it as yardstick to check your financial plans are on track.

The reasons for calculating your net worth differs from one generation to the next, and each age group faces different challenges.

Millennials may spend all of their 20s and some of their 30s in negative wealth, when their debts outweigh what they have and own. Generation X and baby boomers are more likely to have built up property wealth, inherited family heirlooms and cash lump sums or to have bought a second home.

a wealth check will help this generation find out if they are managing their debts and assets efficiently, or if money could be moved from underperforming accounts or investments to be better used elsewhere.

and as Generation X moves closer to retirement, regularly reviewing pensions and investments becomes ever more important.

Baby boomers who have already retired will be more concerned about how they can maintain their lifestyle in retirement and reduce their inheritance tax bill on the estate they leave behind. and millennials are likely to be more focused on how to get on the property ladder.

Personal finance analyst Sarah Coles, of investment service Hargreaves Lansdown, says: ‘Not everyone is bursting to tell their friends what their net worth is, but that doesn’t mean this information is not worth knowing.

‘If you keep track of your net wealth over time, it will highlight what is working for you

and what isn’t — allowing you to make adjustments.’

Heather Owen, financial planner at wealth firm Quilter Private Client advisers, adds: ‘Understanding your monetary position can highlight where you should save more or spend less to reach your financial goals.

‘Doing this early in life can be crucial, particularly for millennials who might be shocked at how much they need to put away if they are going to be able to get a foot on the housing ladder.’ Here is what you should consider when calculating your wealth...

GATHER UP ALL YOUR SAVINGS

DIG OUT your latest statements for any instant access savings accounts, Isas, premium bonds, fixed-term bonds and current accounts. To cut down on the leg work, you can use apps such as Money Dashboard or your own bank’s app if they use so- called open banking. This allows you to link up your accounts in one place so you can see your balances on one screen instead of using several different log-ins.

CHECK YOUR INVESTMENTS

If yOU have bought shares directly in a company and hold your own share certificates, find your latest statements to show how many you hold.

Next, check the current share price to find out their value. If you use an investment platform you can easily see an up- to- date valuation of the funds and shares you hold in one place.

Most forms of life insurance, such as those that pay out on death or in the event of ill health, are a form of protection against events, rather than an investment so they would not be included in your assessment.

But certain types of life insurance policies, such as with-profit bonds and offshore investment bonds,

are investments, so they can be included.

FIND TRUE VALUE OF YOUR HOME

TO fIND what your house is worth, try websites such as right Move or Mouseprice.

They will give you an approximate valuation by searching the house price growth in your postcode area and looking for comparable homes that have recently sold.

HUNT DOWN ALL PENSIONS

THESE are likely to be a household’s largest asset after their home. Workplace pensions, however, often get forgotten about after moving jobs.

If you have old statements, call up your provider to ask for an update on its value. your pension provider may allow you to view the value of your fund online if you have created an account.

Use the Government’s Pension Tracing Service if you are having trouble finding your savings by calling 0800 731 0193 or using the online form at findpension contacts.service.gov.uk.

you would not include your state pension because it is not a pot of money that belongs to you, but is

a benefit you are entitled to when you reach state pensionable age.

GET VALUATIONS FOR JEWELLERY If yoU have inherited jewellery or have a valuable collection, this can be included in your list of assets.

The value of your jewellery and other collectables will contribute towards your inheritance tax liability after you have passed away so it should be included in any assessment of your wealth.

Jason Hollands, managing director of Tilney Investment Management Services, adds: ‘A diamond engagement ring or luxury watch purchased 15 years ago could now be worth significantly more, but unless you revalue these items periodically, you might discover you are woefully underinsured.’

CASH UP YOUR COLLECTABLES

HIGH- End classic cars, paintings, antiques and stamps can all go up in value, so these should be included in your list of assets.

DON’T FORGET THE DEBTS...

yoUr mortgage and any other loans secured on your home are likely to be your biggest financial commitment.

A statement telling you what you owe is issued annually, but you can call your lender to get a current balance.

All credit card, store card and shopping account balances should be taken into account unless you clear the debt every month.

overdraft facilities that are not cleared monthly, personal loans, car finance agreements, and loans from friends and family that have to be repaid should be added to your list of debts. Student loans for many millennials can last their entire working lives. Contact the Student Loans Company for an up-to-date balance.

To find out how much you are worth, calculate the total value of everything you have and subtract the total value of everything you owe.

The basic way of assessing your wealth is to hunt through paperwork and use a notebook or spreadsheet to write down values — such as the one we have provided on the left.

If you have sufficient wealth to warrant paying an expert, you can ask a financial adviser to do this for you. They can also tell you what you should do to improve your position. Alternatively, you can use an app or an online calculator.

If you are a customer of an investment platform such as BestInvest or AJ Bell, you will have access to their wealth calculators, or you can create an account with a personal finance tool such as Moneyhub.

Moneyhub can be downloaded as an app to use on your phone or used on a computer or tablet, and costs up to £1.49 a month.

you can upload the details of all your accounts, including your workplace, private and Self-Invested Personal Pen-sions. If you add in the value of your property you can tell the app to increase its value every year depending on house price growth in your area. The valuation of any non-financial assets, such as paintings or other collectables, can be added to your account. All loan accounts, including your mortgage, can be also be uploaded.

All your account balances and asset values are displayed on one screen and your total wealth is calculated and displayed in the centre of your home page.

AND AFTER ALL THAT . . .

In 2017, the average net worth in the UK was £155,000, according to Government figures. But depending on your stage of life, this figure is likely to vary widely, and millennials with student debt, for example, will probably be in negative wealth for a large portion of their 20s and 30s.

Their assessment will highlight any imbalances in their finances, such as surplus cash savings in a low- interest bearing account alongside other expensive debt.

Laura Suter, personal finance analyst at AJ Bell, says graduates should focus on paying off high-cost credit or personal loans and starting to save, before worrying about clearing student debt, which is wiped out after 30 years.

She says: ‘Even though it can feel like you are swimming against the tide at this time of life, any money you can put away when you are young will pay off massively in later years.' By sav-ing for long periods, you benefit from so-called compounding.

This is where interest is not only calculated on your initial savings balance or investment but also on previous interest and investment returns added to your fund.

Calculating and tracking how much you are worth can also help you focus on pension saving.

By attaching your pension pots to your spreadsheet or app and tracking them, paying into your pension can feel less like a tax and more like savings as you watch your personal and employer contributions mount up every month. Knowing how much you are worth can help you check

your financial health and plan for the future.

The finances of a Generation X (those born between 1966 and 1980) household may still be recovering from costly parenting years, but want to know their prospects for early retirement.

Ms Suter says: ‘Generation X are still likely to face high outgoings, between paying for any children, paying for education for them and paying off mortgage debt.

‘At this point of life they should pay attention to boosting pension contributions to counteract any leaner years they may have had — particularly anyone who has taken a career break.

It’s also a good idea to build on your investments and savings pot, using any Isa allowances you can.’

On reaching your retirement, at last, what you own is likely to be more than what you owe.

If you carry out your wealth check early enough, cash, property wealth or other taxable assets can be gifted to relatives to reduce your inheritance tax liability when you die.

You may also want to consolidate your pensions in one place so you can see what you have, how it’s invested to make sure you are earning the best return.

Provisions for long-term care may also be a consideration of your wealth plan.