How to Calculate Your Net Worth (and Why It Matters)

If you could track just one number to measure your financial progress, it would be your net worth. Income tells you how much money flows in; net worth tells you how much you've actually kept and built. And calculating it comes down to a single subtraction.

The formula

Net worth = what you own − what you owe

In other words, total up your assets, total up your liabilities, and subtract the second from the first. The result can be positive or negative — and either way, it's the clearest snapshot of where you stand.

Step 1: Add up your assets

Assets are anything you own that has real financial value:

• Cash in checking and savings accounts
• Investment and retirement accounts (401(k), IRA, brokerage)
• The market value of your home and any other property
• The resale value of your car
• Valuable possessions like jewelry or collectibles
• The value of a business you own

Use current, realistic market values — what things would actually sell for today, not what you paid.

Step 2: Add up your liabilities

Liabilities are everything you owe:

• Mortgage balance
• Car loans
• Student loans
• Credit card balances
• Personal loans and any other debts

Step 3: Subtract

Take your total liabilities away from your total assets. If you own a $300,000 home with a $200,000 mortgage, $40,000 in investments and a $10,000 car, but carry $15,000 in other debt, your net worth is ($300,000 + $40,000 + $10,000) − ($200,000 + $15,000) = $135,000.

Why it matters more than income

A high income doesn't guarantee wealth — plenty of high earners spend everything they make. Net worth captures what you do with your income: whether you're converting it into assets or letting it leak away. It also reveals progress that a paycheck can't, like a shrinking mortgage or a growing investment balance.

A negative net worth isn't a failure, either — it's common early in life with student loans or a new mortgage. What matters is the trend: is the number climbing over time?

Track it regularly

Calculate your net worth at least once a year (quarterly when you're starting out) so you can watch the trend. Use the net worth calculator to add it up in minutes, then revisit it on the same date each year. To grow the number, our guides on paying off debt fast and how compound interest works tackle both sides of the equation.