Net worth is the simplest snapshot of your financial position: everything you own minus everything you owe. It answers one question — "What am I worth financially right now?" — in a single number.
Unlike income, which measures cash flow, net worth measures accumulated wealth. Someone with a high salary but heavy debt can have a lower net worth than a frugal saver with moderate income.
The net worth formula
Net worth = Total assets − Total liabilities.
Assets are things of value you own: cash, checking and savings balances, brokerage and retirement accounts, real estate equity, vehicles, and other investments.
Liabilities are debts you owe: mortgages, student loans, auto loans, credit card balances, personal loans, and any other outstanding obligations.
What to include in assets
Use current market values, not purchase prices. Your home counts at estimated market value minus nothing here — the mortgage goes on the liability side.
Include retirement accounts (401(k), IRA, Roth IRA) even though you cannot spend them freely today. They are part of your economic wealth.
Be consistent. Some people exclude personal property (furniture, jewelry) because values are hard to verify and liquidation is unlikely. That is fine — just apply the same rules every time you track.
What to include in liabilities
List the remaining balance on each loan, not the original loan amount. Credit cards count at the statement balance.
Include co-signed loans if you are legally obligated. Exclude debts you are tracking for someone else only if you have a clear agreement and zero legal exposure (which is rare).
Do not double-count: if you list home value as an asset and mortgage as a liability, you are already capturing equity — do not also net them manually.
How often to track net worth
Monthly or quarterly tracking is enough for most people. Daily swings from stock prices are noise unless you are close to a major decision.
Plot net worth over time to see whether you are building wealth, treading water, or sliding backward. The trend matters more than any single reading.
Pair net worth tracking with savings rate and debt payoff goals. Rising net worth with flat income usually means good savings discipline or investment gains.
Calculate yours in minutes
Add up assets, subtract liabilities, and you have your net worth. A calculator makes it easy to categorize line items and revisit the total when balances change.
Use the net worth calculator to build your balance sheet and update it as accounts grow or debts shrink.