How to Calculate Net Worth (Formula + Worked Example)

Net worth is everything you own minus everything you owe. Add up your assets — cash, investments, retirement accounts, your home at market value — then subtract your liabilities: mortgage balance, student loans, car loan, credit card balances. What remains is one number, and it is allowed to be negative.

That subtraction is the whole formula. Every argument about net worth is really an argument about which line items belong on which side, so let me handle those head-on rather than leaving you to guess.

What counts as an asset and what counts as a liability?

The test for an asset is simple: could you sell it for money? The test for a liability is simpler still: does someone expect to be paid?

Assets (what you own)	Liabilities (what you owe)
Checking and savings balances	Mortgage balance outstanding
Cash ISAs, money market funds, CDs	Home equity line of credit
Taxable brokerage accounts	Student loans
401(k), IRA, workplace pension pot	Car loan or lease balance
Crypto, at today's price	Credit card balances
Home, at market value not purchase price	Buy-now-pay-later balances
Rental property, at market value	Personal or family loans
Vehicles, at realistic private-sale value	Tax owed but not yet paid
Business equity you could actually sell	Unpaid medical bills

Three notes on that table.

Market value, not what you paid. A house bought for $290,000 and now worth $410,000 goes in at $410,000. Same for a portfolio: today's price, not your cost basis.

Mortgage balance, not the original loan. The liability is what is left to pay, which you can read off this month's statement.

Not everything you own is an asset. Your sofa is not on the list. Neither is your wardrobe. If you would not go through the effort of selling it, leave it out — the precision you gain is not worth the fiction you introduce.

How is net worth calculated? Assets minus liabilities. List everything you own that has a resale value — cash, brokerage and retirement accounts, your home at today's market value, a car worth selling — and total it. Then list every balance you owe: mortgage, student loans, car finance, credit cards, tax due. Subtract the second total from the first. Value the home at what it would sell for today and the mortgage at what is left outstanding, not the original loan. Keep two versions of the answer: a total net worth that includes property and vehicles, and an investable net worth that leaves both out, because those two figures answer genuinely different questions. Track the same list every month rather than perfecting it once, because the direction of travel is the useful signal and a single snapshot has none. A negative result is common in your twenties and says nothing about whether you are doing well.

The three items people argue about

Your house. It counts. It is an asset at market value, offset by the mortgage on the other side, so what actually flows into net worth is your equity. The objection — that you cannot spend it, because you have to live somewhere — is a fair description of liquidity, not of ownership. The Federal Reserve's 2022 Survey of Consumer Finances found 66.1% of US families owned their primary residence, at a median value of $323,200, and states plainly that the balance sheet of families in the middle of the net worth distribution "is dominated by housing." Excluding the house means excluding most of the wealth of most households.

Your pension. A defined-contribution pot — a 401(k), an IRA, a workplace pension with a balance — is an asset. It has a number, it is yours, and it counts. Only 54.3% of US families held any retirement account at all in 2022, so if you have one it is likely a bigger share of your total than you assume. A defined-benefit pension that pays an income rather than holding a balance is different: it has no market value, so leave it off the balance sheet and treat it as income in your retirement planning instead.

Your car. Vehicles are the most commonly held non-financial asset in America — 86.6% of families own one — and they are also the asset most likely to flatter a balance sheet. Value it at what a private buyer would actually pay this month, not at what you paid, and subtract the finance. On many balance sheets a car nets out to almost nothing.

The house rule that ends all three arguments: track two views. One total net worth including property and vehicles, one investable net worth that excludes them. They answer different questions. Total tells you what you are worth. Investable tells you what could actually pay for your life if the income stopped. Keep both and you never have to pick a side.

A worked example

One household, everything on the table.

Assets	Amount
Checking and savings	$18,000
Taxable brokerage	$46,000
401(k)	$132,000
Roth IRA	$38,000
Home, market value	$410,000
Car, private-sale value	$14,000
Total assets	$658,000

Liabilities	Amount
Mortgage balance	$286,000
Student loans	$19,400
Car loan	$11,500
Credit cards	$3,100
Total liabilities	$320,000

Net worth = $658,000 − $320,000 = $338,000.

Now the second view. Strip out the house and the car along with the debts attached to them: $234,000 of financial assets minus $22,500 of student and card debt gives $211,500 of investable net worth. The difference between the two figures is $124,000 of home equity plus $2,500 of car equity — and the household lives in the first number while its financial freedom depends on the second.

Why tracking monthly beats calculating once

A single net worth figure is nearly useless. You have no idea whether $338,000 is a good result without knowing whether last month said $331,000 or $349,000.

The value is in the derivative. Month over month, the number rises for exactly three reasons — you saved, your investments grew, or you paid down debt — and falls for the mirror set. Watch it for a year and you learn which of those is doing the work in your life. That is behavioral information you cannot get from an annual snapshot.

It also protects you from the two failure modes. A number that only ever goes up because markets went up hides a savings rate of zero. A number stuck flat while your salary rose points straight at lifestyle creep. Neither shows up in a one-off calculation.

Same day each month, same list, five minutes. Consistency beats precision here by a wide margin — an approximate home value used consistently gives you a better trend line than a perfect appraisal you obtain once.

Is my net worth good for my age?

The usual reference point is the Federal Reserve's Survey of Consumer Finances, which put median US family net worth at $192,900 in 2022 and mean net worth at $1,063,700. That gap is the entire lesson: averages in wealth data are dragged upward by the top and describe almost nobody. Use the median.

For the age-by-age breakdown, I wrote up the full table in net worth by age. To see where your own number sits in the distribution rather than against a single midpoint, our net worth percentile calculator is free and takes about a minute. And if you are still early in this, the first $100,000 is the stretch worth understanding before any benchmark matters.

Where to keep the number

A spreadsheet works. That is how I did it for years, and it is genuinely fine.

What made me build something else was the monthly friction: nine balances scattered across six institutions, re-typed by hand, until the month I did not bother and the habit broke. Our net worth tracker keeps both views — total and investable — updates market prices for holdings, and deliberately does not connect to your bank. You type the balances in.

That last part is a design decision people either love or find odd, and I have written out the full reasoning elsewhere. Handing a third party read access to your entire transaction history is a meaningful thing to do, and for a number you update once a month it buys convenience you do not really need. Manual entry also has a quiet side benefit: typing the credit card balance yourself every month is harder to ignore than watching it sync.

Assets minus liabilities. Do it today, write down the result, and do it again in thirty days. The second number is where this starts being useful.