How to Calculate Net Worth

What net worth means, how to calculate it, what counts as an asset or liability, and what's a good net worth by age.

The formula

Net Worth = Total Assets − Total Liabilities

Net worth is a snapshot of your financial position at a point in time. A positive number means you own more than you owe. A negative number — common early in adult life — means debts exceed assets.

What counts as an asset

Assets are things of value that you own:

Liquid assets

Checking & savings accounts
Money market accounts
Cash

Investments

Brokerage accounts
401(k) & IRA balances
Stocks, ETFs, bonds

Real estate

Home (current market value)
Investment properties
Land

Other

Vehicles (current value)
Business equity
Collectibles, jewelry

What counts as a liability

Liabilities are debts you owe:

—Mortgage balance (not the property value — the remaining loan)
—Auto loans
—Student loans
—Credit card balances
—Personal loans
—Medical debt
—Business loans

Worked example

ASSETS
  Checking account          $8,000
  Savings account          $15,000
  401(k)                   $62,000
  Home (market value)     $380,000
  Car (trade-in value)     $18,000
  Total assets:           $483,000

LIABILITIES
  Mortgage balance        $295,000
  Auto loan                $12,000
  Student loans            $24,000
  Credit card balance       $3,200
  Total liabilities:      $334,200

NET WORTH = $483,000 − $334,200 = $148,800

What's a good net worth by age?

The rule of thumb from personal finance: your net worth should be roughly your age × your annual income ÷ 10. At 35 earning $70,000/year, that's $245,000. This is a rough benchmark, not a judgement.

Median US net worth by age (Federal Reserve, 2022): under 35: $39,000 · 35–44: $135,000 · 45–54: $247,000 · 55–64: $364,000 · 65–74: $410,000. The average is much higher because it's skewed by the ultra-wealthy.

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Frequently asked questions

Should I include my home in net worth?: Yes, at current market value minus the mortgage balance. Your home equity (value minus what you owe) is a genuine asset. However, it's illiquid — you can't spend it without selling or borrowing against it. Many financial advisors track "liquid net worth" (excluding home equity and retirement accounts with early withdrawal penalties) separately as a more practical measure.
How often should I calculate my net worth?: Once a quarter or once a year is sufficient for most people. More frequent tracking can create anxiety around normal market fluctuations, especially for investment-heavy portfolios. The trend over years matters more than any single snapshot.
Is a negative net worth bad?: It depends on why. Negative net worth from student loans and a mortgage early in your career is normal and expected — these are investments in future income. Negative net worth from consumer debt (credit cards, car loans) at mid-career is a warning sign worth addressing. Track the trend: is net worth increasing year over year?