How to Calculate Your Net Worth

Your net worth is what you own minus what you owe. Add up the current value of your assets, subtract every debt against them, and the difference is the number.

Net Worth = Total Assets - Total Liabilities

It is the single figure that captures where you stand, which is why it works better as a progress measure than income does. A raise shows up in your income immediately; whether it made you better off shows up in your net worth a year later.

How to Calculate Your Net Worth

Pick a date, value everything as of that date, and be consistent about it every time you repeat the exercise.

Add up your assets

Use current market value, not what you paid:

• Cash in checking, savings, and money market accounts
• Investments: brokerage accounts, stocks, bonds, funds
• Retirement accounts: 401(k), IRA, Roth accounts, HSA
• Real estate at what it would sell for today, not its purchase price or tax assessment
• Vehicles at resale value
• Business interests, and any other property substantial enough to matter

Add up your liabilities

Use the current payoff balance, not the original loan amount:

• Mortgage and any home equity debt
• Auto loans
• Student loans
• Credit card balances
• Personal, medical, and other outstanding debt

Subtract

Say you own a home worth $250,000, investments worth $50,000, and $10,000 in savings, against a $150,000 mortgage and a $10,000 car loan. Assets come to $310,000 and liabilities to $160,000, so your net worth is $150,000.

Note what the house contributes on net. It enters as a $250,000 asset and the mortgage as a $150,000 liability, so its contribution to the total is the $100,000 of equity between them. Counting an asset at full value while leaving off the debt attached to it overstates the result.

What the Number Leaves Out

Net worth is a snapshot of stock, not flow, and there are three things it will not tell you.

Not all of it is spendable. A traditional 401(k) balance is stated before the income tax that will be due on withdrawal, so a $500,000 balance is worth meaningfully less than $500,000 to you. A taxable account with large unrealized gains carries a similar embedded tax liability. Two people with identical net worth can have quite different amounts of money actually available, depending on which accounts it sits in.

Not all of it is reachable. Home equity is usually the largest asset a household has and among the hardest to spend without selling or borrowing. This is why liquid net worth, which counts only what could be converted to cash quickly, is often the more useful figure for near-term decisions.

It says nothing about cash flow. Net worth can climb while your monthly finances are strained, and a comfortable income can coexist with a net worth near zero. The two measure different things and you need both.

Negative Net Worth Is Normal for a While

Finishing school with student debt and no assets puts you below zero. Buying a home does not by itself, since the mortgage arrives alongside an asset of similar value, though closing costs and agent fees come straight off the total. Negative net worth is a stage rather than a verdict. What matters is the direction of travel over a few years, not the sign in any given month.

Tracking It Over Time

Calculate it on a schedule, once or twice a year, and always the same way. Any single reading is noisy, since markets move and home valuations are estimates. The trend is the signal.

The more useful version of this exercise is forward-looking: projecting where your net worth is heading under your current saving and spending, then checking your actual figures against that projection as the years pass. You can project net worth over the life of your plan in ProjectionLab and overlay the progress you have actually recorded on top of the projection.

Frequently Asked Questions

How do I calculate my net worth? Total the current value of everything you own, total every debt you owe, and subtract the second from the first. Twenty minutes with your account balances and loan statements is usually enough.

Should I include my house? Yes, at what it would realistically sell for, with the mortgage balance listed as a liability. The net effect is your equity. Some people track a second figure that excludes the home entirely, which is a reasonable way to see how the rest of the balance sheet is doing.

Should I include my retirement accounts? Include them at their balance, and remember that traditional pre-tax accounts will be reduced by income tax when the money comes out. Qualified Roth withdrawals come out tax-free, so those balances need no such adjustment, which is why two portfolios of the same size are not always worth the same.

What is a good net worth? There is no threshold that makes an answer meaningful on its own, because the figure depends on age, income, cost of living, and how long someone has been earning. The comparison that carries information is against your own number a year ago and against what your plan needs it to be, not against a population average.