How to calculate your net worth, with a worked example
Your net worth is everything you own minus everything you owe. It takes about half an hour to work out the first time, and it's the clearest single number for whether your finances are moving in the right direction.
Updated October 17, 2026
The formula
Net worth = total assets − total liabilities
Assets are things you own that have a money value. Liabilities are debts. Use balances from the same day where you can, so the snapshot is consistent.
Step 1: add up your assets
- Cash: checking and savings accounts, and physical cash if it's a meaningful amount.
- Investments: brokerage accounts, and the current value of retirement accounts such as a 401(k) or IRA.
- Your home, if you own one, at a realistic market value. Recent sale prices of similar homes nearby are a better guide than an optimistic online estimate.
- Vehicles at what you could sell them for today, not what you paid.
- Money owed to you, like a deposit you'll get back.
Leave out everyday belongings like furniture, clothes and electronics. They're hard to value and rarely sell for much. Include an item only if it's genuinely valuable and you could sell it, like jewelry or collectibles with a known market.
Step 2: add up what you owe
- Mortgage: the remaining balance, not the original loan.
- Car loans and personal loans.
- Student loans.
- Credit card balances, using the current balance rather than the minimum payment.
- Buy now, pay later plans, medical bills, and money you owe to family or friends.
A worked example
Here's an example for an imaginary person with a car loan, student loans and a little in savings. The numbers are made up to show the method.
| Assets | Value |
|---|---|
| Checking account | $2,400 |
| Savings account | $6,500 |
| 401(k) | $18,200 |
| Car, at resale value | $11,000 |
| Total assets | $38,100 |
| Liabilities | Balance |
|---|---|
| Car loan | $8,300 |
| Student loans | $21,500 |
| Credit card | $1,750 |
| Total liabilities | $31,550 |
Net worth = $38,100 − $31,550 = $6,550.
If the same person paid off the $1,750 card balance from savings, their net worth wouldn't change: assets and debts would both drop by $1,750. What changes net worth is the gap between what comes in and what goes out over time, plus changes in what your assets are worth.
What the number means
- A negative net worth is common, especially early in a career with student loans. It's a starting point, not a verdict.
- The direction matters more than the size. A net worth that rises every quarter is a sign things are working, whatever the starting number.
- Don't compare yours to strangers'. Age, location, income and debt make comparisons misleading. Compare yourself with yourself a year ago.
Two things move it up fastest: spending less than you earn, consistently, and paying down high-interest debt, which stops interest from eating into the gap.
A note on special definitions
Some forms use their own rules for what counts. Financial aid forms such as the FAFSA, for example, don't ask you to report the home you live in or retirement accounts as assets. When a form asks for net worth, follow its instructions rather than this general method.
How often to recalculate
Once a month or once a quarter is plenty. Pick a fixed day, like the first of the month, and use the same sources each time so the numbers are comparable. Between full recalculations, logging your income and spending tells you most of what changed.
