Transparent method
The formula
Worked example
Example inputs
How to interpret the result
Net worth is what you own minus what you owe, and the direction of change tells you more than the level. With $180,000 in cash and investments and $450,000 in property and other assets against $300,000 of mortgage and $35,000 of other debt, net worth is about $295,000 and total liabilities are about $335,000. Paying down debt and saving raise it, and so does an asset rising in value, which you do not control. Track the same items each quarter.
Before you rely on it
What to check
Value assets at what you could sell them for, after costs, and list every debt. Using the price you hope for makes the number look better than it is.
The common error
Where people go wrong with net worth calculator
Comparing your net worth with someone else's. Age, income, family and location make the figures incomparable, and your own trend is the useful signal.
Sensitivity evidence
How cash and investments changes the estimated net worth
| Cash and investments | Estimated net worth | Total liabilities |
|---|---|---|
| $144,000 | $259,000 | $335,000 |
| $162,000 | $277,000 | $335,000 |
| $180,000worked example | $295,000 | $335,000 |
| $198,000 | $313,000 | $335,000 |
| $216,000 | $331,000 | $335,000 |
Every input, tested
Which input moves the estimated net worth most
| Input | Tested from | To | Estimated net worth at each end | Swing |
|---|---|---|---|---|
| Property and other assets | $405,000 | $495,000 | $250,000 to $340,000 | $90,000 (31%) |
| Mortgage debt | $270,000 | $330,000 | $325,000 to $265,000 | $60,000 (20%) |
| Cash and investments | $162,000 | $198,000 | $277,000 to $313,000 | $36,000 (12%) |
| Other debt | $31,500 | $38,500 | $298,500 to $291,500 | $7,000 (2.4%) |
Two variables at once
Estimated net worth by cash and investments and property and other assets
| Cash and investments \ Property and other assets | $360,000 | $450,000 | $540,000 |
|---|---|---|---|
| $144,000 | $169,000 | $259,000 | $349,000 |
| $162,000 | $187,000 | $277,000 | $367,000 |
| $180,000 | $205,000 | $295,000 | $385,000 |
| $198,000 | $223,000 | $313,000 | $403,000 |
| $216,000 | $241,000 | $331,000 | $421,000 |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Cash and investments | $180,000 |
| Property and other assets | $450,000 |
| Mortgage debt | $300,000 |
| Other debt | $35,000 |
| Estimated net worth | $295,000 |
| Total liabilities | $335,000 |
Where the inputs come from
Cash and investments include bank accounts, brokerage accounts and retirement accounts at their current value. Property and other assets include the market value of your home, vehicles and valuables, using a realistic figure such as a recent appraisal or comparable sale. Mortgage debt and other debt cover loans, credit cards and any other liabilities. Use the same date for everything, and be careful not to count items twice.
When the result stops applying
Values for homes, cars and businesses are estimates, and a market drop can change net worth without any action from you. Net worth does not measure cash flow or liquidity, so two people with the same number can be in very different positions. Future obligations such as taxes on retirement accounts are not deducted. Comparisons with others are of limited use.
What to compare it with
See the savings behavior on the savings rate calculator, and goals on the millionaire and retirement calculators. The debt payoff and debt-to-income pages show how liabilities affect you. Update your net worth at the same time each year for comparison.
People also ask
Frequently asked questions
What counts as an asset?
Anything you own that has value: cash, investments, retirement accounts, real estate, vehicles and valuables. Use realistic market values.
Is a negative net worth bad?
It is common early in a career, especially with student loans. The direction matters more, and a rising net worth shows progress.
How often should I calculate net worth?
Once or twice a year is enough to see the trend without being distracted by market swings.