How to Calculate Your Net Worth (with Free Calculator)

Your income tells you what you earn. Your net worth tells you what you're actually worth financially. While a $100,000 salary sounds impressive, someone earning $60,000 with $200,000 in assets and no debt is financially healthier than someone making six figures with $50,000 in credit card debt and no savings.

Understanding and tracking your net worth is one of the most powerful ways to measure financial progress, set meaningful goals, and make smarter money decisions. In this comprehensive guide, you'll learn exactly how to calculate your net worth, what to include (and exclude), and how to use this metric to build lasting wealth.

What is Net Worth and Why It Matters

Net worth is the total value of everything you own (assets) minus everything you owe (liabilities). It's your financial snapshot at a single point in time—the dollar amount you'd have if you sold everything and paid off all your debts today.

Why Net Worth Matters More Than Income

Income is important, but net worth reveals your actual financial health:

• Income is temporary - You can lose your job or face reduced earnings. Net worth represents accumulated wealth that persists regardless of current income.
• Lifestyle inflation hides in income - High earners often have high expenses. Net worth shows whether you're actually building wealth or just spending more.
• Retirement depends on net worth - You can't retire on income alone. You need accumulated assets (net worth) to generate retirement income.
• Financial goals are net worth goals - Buying a home, funding education, achieving financial independence—all require building net worth.

The Difference Between Net Worth and Income

Consider two people:

Person A: Earns $150,000/year, has $10,000 in savings, $30,000 in 401(k), owns a $400,000 home with $350,000 mortgage, has $25,000 in credit card debt, and a $40,000 car loan.

Net worth calculation:
Assets: $10,000 + $30,000 + $400,000 = $440,000
Liabilities: $350,000 + $25,000 + $40,000 = $415,000
Net worth: $25,000

Person B: Earns $75,000/year, has $50,000 in savings, $120,000 in 401(k), rents ($0 home equity), no debt, and owns a $15,000 car outright.

Net worth calculation:
Assets: $50,000 + $120,000 + $15,000 = $185,000
Liabilities: $0
Net worth: $185,000

Person B earns half the salary but has 7x the net worth. They're in a much stronger financial position despite lower income. This is why tracking net worth matters.

The Net Worth Formula Explained

The net worth formula is beautifully simple:

Net Worth = Total Assets - Total Liabilities

That's it. But the devil is in the details—specifically, what you count as assets and liabilities.

Assets: What You Own

Assets are anything of value that you own. They fall into several categories:

• Liquid assets - Cash, checking accounts, savings accounts, money market accounts
• Investments - 401(k), IRA, brokerage accounts, stocks, bonds, mutual funds
• Real estate - Home equity (current market value minus mortgage), rental properties, land
• Vehicles - Cars, motorcycles, boats (current market value, not purchase price)
• Personal property - Valuable jewelry, art, collectibles (only if significant value)
• Business equity - Ownership stake in businesses

Liabilities: What You Owe

Liabilities are all your debts and financial obligations:

• Mortgages - Primary home mortgage, second mortgages, home equity loans
• Auto loans - Car loans, motorcycle loans, boat loans
• Student loans - Federal and private student loan balances
• Credit card debt - All credit card balances
• Personal loans - Personal lines of credit, payday loans, family loans
• Other debts - Medical debt, tax liens, back taxes owed

Step-by-Step Net Worth Calculation

Follow this proven process to calculate your net worth accurately:

Step 1: List All Your Assets

Start by documenting every asset you own. Use current values, not purchase prices:

Liquid Assets:

• Checking account: $________
• Savings account: $________
• Emergency fund: $________
• Cash on hand: $________

Investment Accounts:

• 401(k) / 403(b): $________ (check recent statement)
• Traditional IRA: $________
• Roth IRA: $________
• Brokerage account: $________
• HSA (Health Savings Account): $________

Real Estate:

• Primary home value: $________ (use Zillow estimate or recent appraisal)
• Rental property value: $________

Vehicles:

• Car 1 value: $________ (check Kelley Blue Book or Edmunds)
• Car 2 value: $________

Other Assets:

• Business equity: $________
• Valuable collectibles: $________

Total Assets: $________

Pro tip: TrackMyWorth automatically tracks your assets and calculates net worth for you, updating in real-time as values change.

Step 2: List All Your Liabilities

Now document all debts. Use current balances from recent statements:

Mortgages:

• Primary mortgage balance: $________
• Second mortgage / HELOC: $________

Loans:

• Auto loan 1 balance: $________
• Auto loan 2 balance: $________
• Student loan balance: $________
• Personal loan balance: $________

Credit Cards:

• Credit card 1: $________
• Credit card 2: $________
• Credit card 3: $________

Other Debts:

• Medical debt: $________
• Tax debt: $________
• Family loans: $________

Total Liabilities: $________

Step 3: Calculate the Difference

Simply subtract your total liabilities from your total assets:

Total Assets - Total Liabilities = Net Worth
$________ - $________ = $________

Step 4: Interpret Your Number

Now that you have your net worth, what does it mean?

• Positive net worth: You own more than you owe. This is great! Focus on growing it.
• Negative net worth: You owe more than you own. This is common for young people with student loans. Focus on debt reduction and saving.
• Zero net worth: Assets and debts are equal. You're at a turning point—make smart decisions to tip positive.

Remember: Net worth is a starting point, not a judgment. The goal is progress, not perfection.

What to Include as Assets

Be strategic about what you count as assets. Include items that have real, measurable value:

Always Include

• Cash and cash equivalents - Everything in checking, savings, money market accounts
• Retirement accounts - Full 401(k), IRA, pension values (even though you can't access now)
• Investment accounts - Brokerage accounts, stocks, bonds, mutual funds
• Real estate equity - Market value minus mortgage, not purchase price
• Vehicles - Current market value (conservative estimate)
• HSA balance - Health Savings Accounts are triple-tax-advantaged assets

Sometimes Include

• Business equity - If you own a business, include fair market value (conservative)
• Valuable jewelry - Only if worth $5,000+ (get appraised)
• Collectibles - Art, antiques, rare items with established market value
• Intellectual property - Patents, royalties with proven income streams

Don't Include

• Personal belongings - Clothes, furniture, electronics (they depreciate rapidly)
• Future income - Expected salary, bonuses, or inheritance (not received yet)
• Social Security - Future benefits aren't current assets
• Everyday items - TVs, appliances, dishes (nearly zero resale value)

When in doubt, ask: "Could I sell this for meaningful money within 30 days?" If no, don't include it.

What to Include as Liabilities

Include all debts—money you're legally obligated to repay:

Always Include

• All loan balances - Mortgages, auto loans, student loans, personal loans
• All credit card balances - Even if you pay in full monthly
• Home equity lines of credit (HELOC) - Any amount drawn
• Tax debt - Back taxes, payment plans with IRS
• Medical debt - Hospital bills, payment plans
• Child support / alimony arrears - Any back-owed amounts

Don't Include

• Monthly bills - Upcoming rent, utilities, subscriptions (not debt)
• Future obligations - Next year's property taxes (not owed yet)
• Credit card limits - Only include current balance, not available credit

Special case: Credit cards paid in full - If you always pay your balance in full each month, you can choose to exclude it (since it's really just convenience, not debt). For accurate snapshots, include it.

Interactive Net Worth Calculator

Manual calculation example:

Want automatic calculations? Sign up for TrackMyWorth and track your net worth automatically with beautiful charts showing your progress over time.

How Often to Track Your Net Worth

Consistency matters more than frequency. Choose a schedule and stick with it:

Monthly Tracking (Recommended)

Best for: Active wealth builders, people paying down significant debt, anyone within 5 years of retirement

Why it works: Monthly tracking lets you catch trends early, stay motivated with frequent progress updates, and adjust strategies quickly.

How to do it: Set a recurring calendar reminder for the last day of each month. Spend 15-20 minutes updating account balances. TrackMyWorth makes monthly tracking effortless with automatic updates and trend charts.

Quarterly Tracking

Best for: Established wealth builders with stable finances, people in wealth maintenance mode

Why it works: Less frequent tracking reduces noise from month-to-month fluctuations while still providing regular check-ins.

How to do it: Track on the last day of March, June, September, and December. This aligns with quarterly investment statements.

Annual Tracking (Minimum)

Best for: Long-term investors not in accumulation or drawdown phase

Why it works: Annual tracking shows meaningful progress without constant monitoring.

How to do it: Track every January 1st or December 31st. This also helps with annual financial planning and tax preparation.

Our recommendation: Track monthly when you're building wealth or paying debt. Switch to quarterly once you reach financial stability.

Examples: Net Worth at Different Life Stages

Context matters. Here's what "good" net worth looks like at different ages and stages:

Recent Graduate (Age 22-25, Negative Net Worth OK!)

Typical scenario:

• Assets: $5,000 in savings, $2,000 in 401(k), $8,000 car
• Liabilities: $35,000 student loans, $6,000 car loan
• Net worth: -$26,000

This is normal! Recent graduates often start with negative net worth due to student loans. Focus on:

• Getting a stable job with income
• Starting 401(k) contributions (even 3-5%)
• Building $1,000 emergency fund
• Making consistent student loan payments

Goal: Reach $0 net worth within 5-7 years. Track your debt payoff progress and watch your net worth climb toward positive territory.

Mid-Career Professional (Age 35-45)

Typical scenario:

• Assets: $35,000 cash, $180,000 retirement, $400,000 home, $25,000 car
• Liabilities: $310,000 mortgage, $8,000 car loan, $15,000 student loans
• Net worth: $307,000

Key focus areas:

• Maximize retirement contributions (aim for 15-20% of income)
• Accelerate mortgage payments if desired (or invest difference)
• Build 6-month emergency fund ($30,000-50,000)
• Start 529 plans for kids' education

Goal: Net worth = 2-3x annual income by age 40.

Pre-Retirement (Age 55-65)

Typical scenario:

• Assets: $80,000 cash, $850,000 retirement, $500,000 home, $30,000 car
• Liabilities: $120,000 mortgage, no other debt
• Net worth: $1,340,000

Key focus areas:

• Max out retirement contributions (catch-up contributions allowed)
• Consider paying off mortgage before retirement
• Shift investment allocation to more conservative mix
• Calculate retirement income needs (4% rule: $1.34M = $53,600/year)

Goal: Net worth = 10-12x annual expenses by retirement age.

What Good Net Worth Progress Looks Like

Everyone's journey is different, but healthy net worth growth typically shows:

Early Career (First 10 Years)

• Net worth increases $10,000-30,000 per year
• Liabilities decrease steadily (debt payoff)
• Retirement accounts grow even if small contributions
• Emergency fund reaches 6 months of expenses

Mid Career (Years 10-25)

• Net worth increases $30,000-80,000 per year
• Major debts (student loans, car loans) eliminated
• Home equity builds significantly
• Investment returns start compounding meaningfully

Late Career (Final 10-15 Years)

• Net worth increases $80,000-150,000+ per year
• Peak earning years with maximum retirement contributions
• Mortgage paid off or nearly paid off
• Investment portfolio substantial and growing

The key pattern: Net worth should accelerate over time due to compounding, higher income, and reduced debt. Your largest net worth gains typically come in the final 10-15 years before retirement.

Common Net Worth Mistakes to Avoid

Mistake 1: Overvaluing Assets

Don't use purchase price for cars or sentimental value for personal items. Use conservative market values—what you could actually sell for today.

Mistake 2: Forgetting Hidden Debts

Include all debts: that loan from your parents, the medical bill on a payment plan, the back taxes you owe. Hidden debts distort your true picture.

Mistake 3: Not Tracking Regularly

Calculating once and forgetting about it won't help. The value is in tracking progress over time. Monthly or quarterly reviews keep you motivated and on track.

Mistake 4: Comparing to Others

Your neighbor's net worth is irrelevant. Someone who inherited wealth or started with advantages isn't a useful comparison. Focus on your own progress.

Mistake 5: Ignoring Retirement Accounts

Include your full 401(k) and IRA balances even though you can't access them yet. They're still assets that count toward net worth.

How to Improve Your Net Worth

Once you know your net worth, here's how to grow it:

1. Increase Assets

• Boost retirement contributions by 1-2% annually
• Open and fund Roth IRA ($7,000/year limit)
• Invest raises and bonuses rather than spending
• Build multiple income streams

2. Decrease Liabilities

• Pay extra on highest interest debt first
• Refinance loans to lower rates when possible
• Avoid new debt for depreciating assets
• Pay off credit cards in full monthly

3. Optimize Both

• Invest while paying off debt (balance both goals)
• Use employer 401(k) match (free money)
• Increase income through side hustles or career moves
• Cut unnecessary expenses and redirect to wealth building

TrackMyWorth helps you visualize exactly which actions will have the biggest impact on your net worth, with projections showing future growth based on your current trajectory.

Start Tracking Your Net Worth Today

Net worth is the single most important financial metric to track. It reveals your true financial health, motivates smart money decisions, and shows whether you're making real progress toward your goals.

Your action plan:

1. Calculate your current net worth using the steps above (takes 15-30 minutes)
2. Set a tracking schedule (monthly recommended)
3. Identify 2-3 actions to improve your net worth this year
4. Track progress and adjust your strategy
5. Celebrate milestones (reaching $0, $100K, $500K, $1M)

Don't let the number discourage you—negative or low net worth is just your starting point. What matters is the trend over time. With consistent effort, smart choices, and regular tracking, you'll watch your net worth grow year after year.

Ready to automate your net worth tracking? Sign up for TrackMyWorth free and let our app automatically calculate and track your net worth, showing beautiful charts of your progress over time. Link your accounts once, and we'll handle the rest—no more manual calculations needed.

Related reading: Learn how to manage your monthly bills to free up more money for building your net worth.