Add up what you own and subtract what you owe to calculate your net worth, the single best snapshot of your overall financial health.
What is net worth?
Net worth = Total assets − total liabilities
Assets are things of value you own: cash, savings, retirement and investment accounts, your home, vehicles and other property. Liabilities are debts: mortgage, car loans, student loans, credit cards and personal loans.
Worked example
| Assets | Value | Liabilities | Balance |
|---|---|---|---|
| Cash and savings | $12,000 | Mortgage | $240,000 |
| Retirement accounts | $45,000 | Car loan | $9,000 |
| Home | $320,000 | Credit cards | $3,500 |
| Car | $15,000 | Student loans | $18,000 |
| Total | $392,000 | Total | $270,500 |
Net worth = $392,000 − $270,500 = $121,500.
Why track net worth?
- It shows progress that a budget alone cannot: paying down debt and growing savings both raise it.
- It keeps big decisions in perspective, such as buying a car with a loan, which may leave net worth almost unchanged at first but costs interest over time.
- Updating it every three to six months gives you a clear trend line.
Tips for accurate numbers
- Use realistic values for your home and car: what they would sell for today, not what you paid.
- Use current balances from your latest statements.
- Leave out everyday possessions like furniture and clothes unless they are valuable and sellable.
Frequently asked questions
Is a negative net worth bad?
It is common early in life, especially with student loans. What matters most is the direction it is moving.
How can I increase my net worth?
Spend less than you earn, pay down high-interest debt and invest the difference consistently.
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Results are estimates for planning and education only. They are not financial, tax, legal or medical advice. Check important numbers with a qualified professional.