Your net worth is the single best number to measure your overall financial health. It's a snapshot of everything you own minus everything you owe—and tracking it over time is one of the most powerful ways to see if you're moving in the right direction financially.
The good news: calculating your net worth is simple, and you can do it in about 15 minutes.
What Is Net Worth?
Net worth is the total value of your assets minus your liabilities.
Net Worth = Assets − Liabilities
- Assets: Everything you own that has monetary value
- Liabilities: Everything you owe to others
If you sold everything you own and paid off all your debts, your net worth is what you'd have left. It's essentially your financial score at a moment in time.
💡 Pro Tip: Net worth isn't about income. Someone earning $200,000 with massive debt could have a lower net worth than someone earning $50,000 who saves consistently. What matters is the gap between what you own and what you owe.
Why Your Net Worth Matters
1. It Shows Your True Financial Position
Income alone doesn't tell the whole story. You could earn a high salary but have nothing to show for it if spending exceeds saving. Net worth reveals whether you're actually building wealth.
2. It Tracks Progress Over Time
Checking your net worth monthly or quarterly shows whether your financial decisions are working. A rising net worth means you're on track, even if progress feels slow day-to-day.
3. It Motivates Better Decisions
"Numbers that are watched improve." When you know your net worth and track it, you'll naturally make choices that increase it—spending less, saving more, and paying down debt.
4. It Helps with Financial Planning
Major decisions—buying a house, retiring, changing careers—are easier when you know exactly where you stand financially.
Step 1: List Your Assets
Assets are everything you own that has monetary value. Include both liquid assets (easily converted to cash) and illiquid assets (harder to sell quickly).
Liquid Assets
| Asset Type | Examples | How to Value |
|---|---|---|
| Cash | Checking accounts, savings accounts | Current balance |
| Investments | Brokerage accounts, stocks, bonds, mutual funds | Current market value |
| Retirement accounts | 401(k), IRA, Roth IRA, pension | Current balance |
| Cash value life insurance | Whole life, universal life | Cash surrender value |
| Money owed to you | Loans to others (if likely to be repaid) | Outstanding balance |
Illiquid Assets
| Asset Type | Examples | How to Value |
|---|---|---|
| Real estate | Home, rental property, land | Zillow estimate or recent appraisal |
| Vehicles | Cars, motorcycles, boats | Kelley Blue Book value |
| Business ownership | LLC, partnership interest, stock | Estimated market value |
| Valuables | Jewelry, art, collectibles | Appraised or resale value |
| Other property | Furniture, electronics, equipment | Conservative resale value |
Asset Valuation Tips
- Be conservative: Use what you could realistically sell items for, not what you paid
- Skip small items: Don't list every piece of furniture—focus on items worth $500+
- Use current market values: Investment accounts change daily; use today's balance
- Be honest about vehicles: They're worth less than you think; check actual resale values
📌 Key Takeaway: For most people, the biggest assets are their home (if they own one) and retirement accounts. Don't overthink the small stuff.
Step 2: List Your Liabilities
Liabilities are all debts and financial obligations you owe to others.
Common Liabilities
| Liability Type | Examples | How to Find Balance |
|---|---|---|
| Mortgage | Home loan, HELOC | Monthly statement or lender portal |
| Student loans | Federal and private loans | StudentAid.gov or lender statements |
| Auto loans | Car financing | Lender statement |
| Credit cards | All credit card balances | Card statements or app |
| Personal loans | Bank loans, 401(k) loans | Lender statements |
| Medical debt | Hospital bills, payment plans | Billing statements |
| Other debts | Family loans, back taxes | Written agreements or IRS records |
What to Include
- The full outstanding balance, not monthly payments
- Both secured debt (backed by assets) and unsecured debt (credit cards, personal loans)
- Any money you owe, even to family or friends
⚠️ Warning: Don't forget about debts that are easy to overlook: HELOC balances, 401(k) loans, deferred payment plans, or money borrowed from family.
Step 3: Calculate Your Net Worth
Now for the simple math:
Net Worth = Total Assets − Total Liabilities
Example Calculation
Sarah's Assets:
| Asset | Value |
|---|---|
| Checking account | $3,500 |
| Savings account | $12,000 |
| 401(k) | $45,000 |
| Roth IRA | $18,000 |
| Home value | $350,000 |
| Car value | $15,000 |
| Total Assets | $443,500 |
Sarah's Liabilities:
| Liability | Balance |
|---|---|
| Mortgage | $280,000 |
| Student loans | $22,000 |
| Auto loan | $8,000 |
| Credit card | $2,500 |
| Total Liabilities | $312,500 |
Sarah's Net Worth: $443,500 − $312,500 = $131,000
What If Your Net Worth Is Negative?
A negative net worth means you owe more than you own. This is common for:
- Recent graduates with student loans
- People early in their careers
- Anyone recovering from financial setbacks
A negative net worth is not a failure—it's a starting point.
The important thing is the direction you're heading. If your net worth increases each time you calculate it, you're making progress regardless of the number.
💡 Pro Tip: If you have negative net worth, focus on two things: building an emergency fund and paying off high-interest debt. These actions will improve your net worth the fastest.
What's a "Good" Net Worth?
There's no universal answer, but here are some benchmarks:
By Age (Fidelity's Guidelines)
| Age | Target Net Worth |
|---|---|
| 30 | 1x annual salary |
| 40 | 3x annual salary |
| 50 | 6x annual salary |
| 60 | 8x annual salary |
| 67 | 10x annual salary |
Median Net Worth by Age (Federal Reserve Data)
| Age Group | Median Net Worth |
|---|---|
| Under 35 | $39,000 |
| 35-44 | $135,600 |
| 45-54 | $247,200 |
| 55-64 | $364,500 |
| 65-74 | $409,900 |
📌 Key Takeaway: Don't compare yourself to celebrities or social media posts. Compare yourself to where you were last year. Progress is what matters.
How to Increase Your Net Worth
Net worth grows when you increase assets, decrease liabilities, or both.
Strategies to Build Assets
- Save consistently: Even $100/month compounds over time
- Invest for growth: Stocks and index funds historically grow faster than inflation
- Maximize retirement contributions: Tax-advantaged accounts accelerate wealth building
- Build home equity: Mortgage payments increase your ownership stake
Strategies to Reduce Liabilities
- Pay more than minimums: Extra payments reduce debt faster
- Target high-interest debt first: Credit cards cost the most
- Avoid new debt: Don't add liabilities while paying down existing ones
- Refinance if beneficial: Lower interest rates mean more money toward principal
Tracking Your Net Worth Over Time
How Often to Calculate
- Monthly: If you're actively paying off debt or in a transition
- Quarterly: For most people, this is the sweet spot
- Annually: At minimum, review once per year
Tools to Track
- Spreadsheet: Simple and customizable (Google Sheets or Excel)
- Mint or Monarch Money: Auto-syncs accounts, calculates automatically
- Personal Capital (Empower): Great for investment-heavy portfolios
- Manual tracking: Write it down monthly for accountability
What to Watch For
- Overall trend: Is the number going up over time?
- Debt reduction: Are liabilities decreasing?
- Savings rate: Are assets growing steadily?
- Big changes: Investigate any large unexpected changes
Your Net Worth Action Plan
- Set aside 15 minutes to gather your account information
- List all assets with current values (be conservative)
- List all liabilities with outstanding balances
- Subtract liabilities from assets
- Write down the number and the date
- Schedule a reminder to recalculate in 1-3 months
- Focus on direction: Is it trending up?
Your net worth is just a number—but it's a number that reveals whether your financial habits are working. Start tracking today, and you'll have a clear picture of your progress for years to come.