How Do I Calculate My Net Worth?

Quick Answer

Net worth equals total assets minus total liabilities. Add up everything you own (cash, investments, retirement accounts, home equity, vehicles at resale value) and subtract everything you owe (mortgage, car loans, credit card balances, student loans).

The result is the single best snapshot of your financial position. A positive number means you own more than you owe. A negative number is common early in a career and is fixed by paying down debt and growing investments, not by earning a higher salary alone.

Recalculate once a quarter, not weekly. Short term market and home value swings will distort the trend if you check too often.

The formula in plain English

Net Worth = Total Assets minus Total Liabilities.

Assets are anything you own that has cash value or could be sold. Liabilities are anything you owe to someone else. The math is intentionally simple. What trips people up is the inventory step, not the arithmetic.

Your salary is not part of this calculation. Income is a flow, net worth is a stock. A high earner with zero savings and a big car loan can have a lower net worth than a teacher with a paid off house and a steady 401k.

Step 1: Add up your assets

Group assets by liquidity so you can see what is actually accessible versus what is locked up.

Liquid and financial assets

• Cash and checking accounts. Every bank balance you control today.
• High yield savings and money market accounts. Use the current balance, not the projected interest.
• Brokerage and taxable investment accounts. Use today's market value.
• Retirement accounts. 401(k), 403(b), Traditional IRA, Roth IRA, SEP IRA, pensions with a stated cash value.
• Cryptocurrency and precious metals. Mark to market at today's spot price.
• Cash value of permanent life insurance. Only the cash surrender value, not the death benefit.

Illiquid and tangible assets

• Primary residence. Use a conservative current market estimate from Zillow, Redfin, or a recent comparable sale, not what you hope to sell for.
• Investment property. Same logic. Net of expected selling costs is even more honest.
• Vehicles. Use a Kelley Blue Book private party value, not the original sticker.
• Business equity. If you own a business, use a defensible valuation (revenue multiple, recent offer, or book value).
• Collectibles, art, jewelry. Only include items with a verifiable resale market. Skip furniture and electronics.

Step 2: Add up your liabilities

Be ruthless here. Every dollar you owe counts, including zero interest promotional balances.

Secured debts

• Mortgage principal balance. The remaining payoff, not the original loan amount.
• Home equity loan or HELOC balance.
• Auto loans. Use the current payoff quote from your lender.

Unsecured debts

• Credit card balances. Total statement balances, even cards you plan to pay off this month.
• Federal and private student loans. Including any accrued interest.
• Personal loans. Bank, peer to peer, family loans you intend to repay.
• Medical debt. Open balances and active payment plans.
• Buy now pay later balances. Klarna, Affirm, Afterpay, etc.
• Tax debt. Outstanding IRS or state balances.

Step 3: Run the calculation

Here is a realistic mid career snapshot.

Net worth = $432,000 minus $319,500 = $112,500.

How often should you calculate it?

Quarterly is the sweet spot. Monthly works if you enjoy the discipline, but weekly tracking adds noise without insight: a normal 10 percent S&P 500 pullback could shave thousands off your number for reasons that have nothing to do with your behavior.

Use the same valuation method every time. If you used Zillow's Zestimate in March, use it again in June. Consistency matters more than precision.

Benchmarks: how do you compare?

The Federal Reserve's Survey of Consumer Finances publishes US median net worth by age. As of the 2022 release (the most recent available), median household net worth was roughly $192,700, with sharp variation by age: under 35 around $39,000, ages 45 to 54 around $247,200, and 65 to 74 around $409,900.

Treat these as context, not goals. Your number depends on geography, family obligations, and life stage. The only meaningful comparison is your number this quarter versus your number last quarter.

What if your net worth is negative?

Negative net worth is extremely common in your 20s and early 30s, especially after graduate school. It is not a verdict, it is a starting line. Focus on:

• Eliminating high interest debt (anything above ~7 percent) before aggressive investing.
• Capturing every dollar of employer 401(k) match. That is a 100 percent return on day one.
• Building a small emergency fund (one month of expenses) so a flat tire does not become a credit card balance.

The number will turn positive faster than you expect once compound interest starts working with you instead of against you.

FAQs

Should I include my salary in net worth?

No. Salary is income, not an asset. It funds the assets you eventually accumulate, but it has no place on a net worth statement.

Do I subtract closing costs from my home value?

For a conservative number, yes, subtract roughly 6 to 8 percent for agent commissions and closing fees. For a quick estimate, market value alone is fine as long as you apply the same rule each quarter.

How do I value a private business?

The defensible options are: a recent funding round price, a multiple of trailing twelve month revenue or EBITDA appropriate for your industry, or net book value. Pick one and apply it consistently.

Does my 401(k) count if I cannot touch it yet?

Yes. It is your money even if early withdrawal carries a penalty. Many people use the pre tax balance for simplicity; if you want to be conservative, multiply Traditional 401(k) balances by (1 minus your expected retirement tax rate) to approximate after tax value.

The takeaway

Net worth is the scoreboard. Income is the engine. Track the scoreboard once a quarter, focus daily on the engine (earn more, spend less, invest the difference), and the number will compound in the direction you want.