Here is how to calculate your net worth: add up the value of everything you own, then subtract everything you owe. The number left over is your net worth. If you own $250,000 in assets and owe $180,000 in debts, your net worth is $70,000.
It takes about an hour the first time, and you only need a few account statements and a calculator. Below are the exact steps, a worked example and the mistakes that make the number wrong.
Key Takeaways
- Net worth equals total assets minus total liabilities.
- Use today’s market value for assets, not what you paid.
- Count every debt, including credit cards, car loans and student loans.
- A negative net worth is common early in life and is a starting point, not a verdict.
- Recalculate every 6 to 12 months and watch the trend, not one snapshot.
What is net worth, in plain terms?
Net worth is what you would have left if you sold everything you own and paid off every debt. Accountants write it as a simple formula:
Net worth = Total assets minus Total liabilities
Assets are things with money value that you own, such as cash, investments, a home or a car. Liabilities are debts you still have to pay, such as a mortgage, a credit card balance or a student loan.
Income is not part of the formula. Two people who each earn $90,000 a year can have very different net worths, depending on what they have saved and what they owe. That is also why a celebrity’s salary and their net worth rarely match.
How to calculate your net worth, step by step
Follow these steps in order. Write each number down in a notebook or a simple spreadsheet so you can update it later.
- Gather your statements. Collect the latest balances for bank accounts, retirement plans, brokerage accounts, loans and credit cards. Most are in your banking apps.
- List your cash. Add checking, savings, money market accounts and certificates of deposit.
- List your investments. Add the current value of retirement accounts such as a 401(k) or IRA, plus any brokerage accounts, stocks, bonds or funds.
- Value your property. Estimate what your home, car and other large items would sell for today.
- Add up your total assets. This is everything from steps 2 to 4.
- List every debt. Include your mortgage balance, home equity loans, car loans, student loans, credit cards, personal loans and any money owed to family or tax authorities.
- Add up your total liabilities.
- Subtract. Total assets minus total liabilities equals your net worth.
What counts as an asset?
An asset is anything you own that could be turned into money. It helps to sort assets into groups, because some are easy to sell and some are not.
Liquid assets
Liquid assets are cash or things you can turn into cash within days: checking and savings balances, money market funds and most stocks and funds in a taxable brokerage account.
Retirement and long-term investments
These include 401(k) plans, IRAs, pensions with a cash value, and the cash value of a whole life insurance policy. Count the current balance. Some people subtract the tax they would owe on withdrawal to get a more cautious figure. Either way is fine, as long as you use the same method every time.
Property and possessions
Your home is usually the largest asset. Use a realistic sale price, based on what similar homes nearby have sold for recently. A car loses value every year, so use a used-car pricing guide rather than the purchase price. Furniture, clothes and electronics are worth far less than they cost, so most people leave them out unless an item is valuable, such as jewelry or art with a recent appraisal.
Business interests
If you own part of a business, include a fair value for your share. This is the hardest asset to price, so be conservative. It is also the reason the net worth of business owners, from small shop owners to billionaires, is always an estimate.
What counts as a liability?
A liability is any money you owe to someone else. Use the payoff balance, not the monthly payment. Common liabilities include:
- Mortgage and home equity loans
- Car loans and leases with a buyout balance
- Student loans
- Credit card balances, even ones you plan to pay this month
- Personal loans, medical bills and buy-now-pay-later plans
- Taxes you owe but have not paid yet
Leave out regular bills that are not debts, such as rent, utilities or a phone plan. Those are living costs, not money you already borrowed.
A worked example
Here is a sample calculation for a household with a home, two retirement accounts and a few loans. The figures are made up to show the method.
| Item | Type | Value |
|---|---|---|
| Checking and savings | Asset | $14,000 |
| 401(k) and IRA | Asset | $86,000 |
| Brokerage account | Asset | $12,000 |
| Home (current market value) | Asset | $340,000 |
| Car (resale value) | Asset | $15,000 |
| Total assets | $467,000 | |
| Mortgage balance | Liability | $255,000 |
| Car loan | Liability | $9,000 |
| Student loans | Liability | $21,000 |
| Credit cards | Liability | $3,500 |
| Total liabilities | $288,500 | |
| Net worth | $178,500 |
Notice that the home adds $340,000 to assets, but the mortgage takes $255,000 away. The real contribution of the house to this family’s net worth is the $85,000 of equity, the part they truly own.
What mistakes make the number wrong?
A few common errors can throw off your result by thousands of dollars:
- Using purchase prices. A car bought for $35,000 three years ago may sell for $20,000 today. Use what it is worth now.
- Forgetting small debts. Store cards, medical bills and buy-now-pay-later plans add up.
- Counting income as an asset. Next month’s paycheck is not an asset until it lands in your account.
- Overvaluing possessions. Most household items resell for a small fraction of their cost.
- Counting the same money twice. If your savings already paid down a credit card, update both balances.
What is a good net worth?
A good net worth is one that grows over time. Age, income and where you live all change what is normal, so comparing yourself with a single national number has limits.
For context, the Federal Reserve’s Survey of Consumer Finances put the median net worth of U.S. families at $192,900 in 2022, while the average was about $1.06 million. The average is much higher because a small number of very wealthy households pull it up. The median, the family right in the middle, is the better guide for most people.
Net worth also tends to rise with age. Young adults often start near zero or below because of student loans, then build wealth through home equity and retirement savings in their 40s, 50s and 60s.
What if your net worth is negative?
A negative net worth means you owe more than you own. It is common for recent graduates, new homeowners in their first years and anyone carrying large medical or credit card debt.
The fix is to move the number in the right direction, one step at a time:
- Build a small emergency fund so new costs do not go on a credit card.
- Pay off high-interest debt first, since it grows the fastest.
- Save automatically each payday, even a small amount.
- Recalculate in six months and compare.
How often should you calculate your net worth?
Once or twice a year is enough for most people. Pick a fixed date, such as January 1 or your birthday, and use the same method each time. Checking more often than monthly mostly shows stock market swings, which can be stressful without being useful.
The trend matters more than any single result. A net worth that rises every year, even slowly, means your saving and debt payoff are working.
How do the rich calculate their net worth?
They use the same formula, assets minus liabilities, but their assets are harder to price. Billionaires often hold large stakes in companies, private businesses, real estate and art. Public shares can be valued daily, but private companies have no market price. That is why every figure on a billionaire net worth list is an estimate.
A bank CEO paid mostly in stock is a good example. Our profile of Jamie Dimon’s net worth shows how one company’s share price can move a fortune by hundreds of millions in a year. Media stars work differently. Their estimates mix salaries, property and private businesses, as our look at Tucker Carlson’s net worth shows. You can find more explainers like this one in our Blog, and real-world examples in the CEOs & Executives section.
Conclusion
Knowing how to calculate your net worth takes one formula: total assets minus total liabilities. Gather your balances, value property at what it would sell for today, list every debt, and subtract. Write the result down, then repeat the process every six to twelve months. A good result is not one magic number. It is a figure that keeps rising over time as you save more and owe less.
Frequently asked questions
Does my house count toward my net worth?
Yes. Count your home at its current market value as an asset, then list the mortgage balance as a liability. The difference, your home equity, is what the house really adds to your net worth.
Should I include my 401(k) in my net worth?
Yes. Retirement accounts such as a 401(k) or IRA are assets you own. Use the current balance. If you want a cautious figure, subtract the income tax you would owe on withdrawal, and use the same method every time.
Is a car an asset or a liability?
A car is an asset worth its current resale value. Any loan on the car is a separate liability. Because cars lose value quickly, a car with a large loan can add very little to your net worth.
Is a negative net worth bad?
A negative net worth means you owe more than you own. It is common in your 20s because of student loans and is not a crisis on its own. Focus on paying down high-interest debt and saving regularly.
What is the difference between net worth and income?
Income is the money you earn over a period, such as a salary. Net worth is a snapshot of what you own minus what you owe at one moment. A high income does not guarantee a high net worth.
