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Your net worth is the single most important number in your financial life. It tells you where you actually stand — not how much you earn, but how much you keep. Here is how to calculate it, what it means, and how to use it.
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The Net Worth Formula
Net Worth = Total Assets – Total Liabilities
That is it. List everything you own, list everything you owe, subtract the second from the first.
What Counts as an Asset
- Checking and savings account balances
- Investment accounts (brokerage, 401(k), IRA, 529)
- Home value (current market value, not purchase price)
- Other real estate
- Vehicle value (use KBB or Edmunds for current market value)
- Business ownership value
- Cash value life insurance
- Collectibles or valuables with verifiable market value
What Counts as a Liability
- Mortgage balance outstanding
- Auto loans
- Student loans
- Credit card balances
- Personal loans
- HELOCs or home equity loans
- Any other debt you owe
Net Worth Example
| Asset | Value |
|---|---|
| Checking account | $8,500 |
| HYSA (emergency fund) | $18,000 |
| 401(k) | $87,000 |
| Roth IRA | $22,000 |
| Brokerage account | $14,000 |
| Home (market value) | $380,000 |
| Vehicle (KBB value) | $22,000 |
| Total Assets | $551,500 |
| Liability | Balance |
|---|---|
| Mortgage | $285,000 |
| Auto loan | $14,200 |
| Student loans | $8,400 |
| Credit card | $1,800 |
| Total Liabilities | $309,400 |
Net Worth: $551,500 – $309,400 = $242,100
Net Worth Benchmarks by Age
| Age | Rough Benchmark |
|---|---|
| 30 | 1x annual income |
| 35 | 2x annual income |
| 40 | 3x annual income |
| 50 | 5x annual income |
| 60 | 7-8x annual income |
| Retirement | 10-12x annual expenses |
These are benchmarks from Fidelity’s retirement research. They are guidelines, not laws. The trend matters more than the absolute number — are you growing your net worth year over year?
How to Increase Your Net Worth
Net worth grows by doing two things: increasing assets or reducing liabilities.
- Increase assets: Contribute to retirement accounts, invest consistently, build savings
- Reduce liabilities: Pay down high-interest debt aggressively, avoid new debt for depreciating assets
- Avoid lifestyle inflation: As income rises, increase savings rate rather than expenses
Tools to Track Net Worth
- Empower (formerly Personal Capital): Free, links all accounts automatically, shows net worth over time
- Monarch Money: Subscription-based, highly rated for comprehensive tracking
- Simple spreadsheet: Monthly update with each account balance — effective and free
Frequently Asked Questions
How do I calculate my net worth?
Total assets minus total liabilities. List everything you own and everything you owe, then subtract.
What is a good net worth by age?
A benchmark: 1x annual income at 30, 3x at 40, 7-10x at retirement. The trend matters more than the absolute number.
Does net worth include home equity?
Yes — current market value minus remaining mortgage. Note that home equity is illiquid.
What if my net worth is negative?
Common early in adult life. Focus on paying down high-interest debt and building savings. Track monthly to confirm improvement.
How often should I calculate my net worth?
Monthly or quarterly. Regular tracking keeps you accountable and aware of your progress.
Information as of May 2026. This is for educational purposes only and not personalized financial advice. Consult a licensed professional for your specific situation.