Your net worth is the clearest picture of your financial health. It is the one number that tells you whether you are moving forward or falling behind. Here is how to calculate it and how to track it over time.
What Is Net Worth?
Net worth is what you own minus what you owe:
Net Worth = Total Assets – Total Liabilities
A positive net worth means you own more than you owe. A negative net worth (common early in life due to student loans) means you owe more than you own.
The goal is not to hit some specific number — it is to make the number grow over time.
Step 1: List Your Assets
Assets are everything you own that has monetary value.
Liquid assets (easy to access):
- Checking account balance
- Savings account balance
- Cash
Investment assets:
- 401(k), IRA, Roth IRA balances
- Brokerage account balances
- Pension value (if applicable)
- Crypto holdings
Physical assets:
- Home value (use Zillow or Redfin for an estimate)
- Car value (use Kelley Blue Book)
- Other property
Add them all up. That is your total assets.
Step 2: List Your Liabilities
Liabilities are everything you owe.
- Mortgage balance
- Car loan balance
- Student loan balance
- Credit card balances
- Personal loan balances
- Medical debt
- Any other debt
Add them all up. That is your total liabilities.
Step 3: Calculate the Difference
Subtract liabilities from assets. The result is your current net worth.
Example: $180,000 in assets – $95,000 in liabilities = $85,000 net worth.
Do not panic if the number is negative or lower than you expected. The point is to have a baseline to improve from.
Step 4: Track It Over Time
The real value of tracking net worth comes from watching it change over months and years. Update your calculation monthly or quarterly. You do not need daily precision.
What you are looking for:
- Is the number growing?
- Which liabilities are shrinking fastest?
- Are your investments compounding?
- Did a large expense set you back — and have you recovered?
Tools for Tracking Net Worth
Spreadsheet — A simple Google Sheet with a “Date” column and columns for each account works well. Update monthly. Free and fully customizable.
Monarch Money — Links to your accounts automatically and calculates net worth in real time. Paid ($99/year) but comprehensive.
Personal Capital (Empower) — Free net worth dashboard that pulls in all your accounts. Popular for tracking investment accounts alongside checking and savings.
YNAB — Focuses more on budgeting but includes a net worth view if you use it consistently.
What Your Net Worth Number Tells You
Net worth does not tell you everything. A 28-year-old with $50,000 in net worth who is maxing their 401(k) every year is in great shape. A 55-year-old with $50,000 in net worth who is five years from retirement is in trouble.
Context matters. Use benchmarks as rough guides:
- Age 30: aim for 1x your annual salary in net worth
- Age 40: aim for 3x your annual salary
- Age 50: aim for 6x your annual salary
- Age 60: aim for 8–10x your annual salary
These are guidelines, not rules. Your situation is unique.
How to Grow Your Net Worth
Net worth grows in two ways: adding to assets and reducing liabilities.
- Increase income and invest the difference
- Pay down high-interest debt aggressively
- Avoid lifestyle inflation as your income rises
- Let compounding do its work over time
Bottom Line
Tracking net worth takes about 30 minutes to set up and 10 minutes per month to maintain. It is the single best metric for measuring financial progress. Start today, update regularly, and let the number motivate your decisions throughout the year.