Understanding Your Net Worth
Your net worth is a single number that tells you exactly where you stand financially. Here's how to calculate it and make it grow.
Your net worth is the simplest, most honest measure of your financial health. It's not your salary, not your credit score, not your savings account balance. It's everything you own minus everything you owe. That one number tells the true story.
How to Calculate Net Worth
The formula is simple:
Net Worth = Total Assets - Total Liabilities
Assets (What You Own)
- Cash: Checking, savings, money market accounts
- Investments: 401(k), IRA, brokerage accounts, stocks, bonds
- Real estate: Current market value of your home
- Vehicles: Current market value (not what you paid)
- Other: Business equity, valuable personal property, HSA balance
Liabilities (What You Owe)
- Mortgage: Remaining balance
- Student loans: Remaining balance
- Auto loans: Remaining balance
- Credit card debt: Current balance
- Personal loans: Remaining balance
- Other: Medical debt, back taxes, etc.
A negative net worth is completely normal for young adults, especially with student loans. The important thing isn't where you start — it's the direction you're moving. If your net worth increases every quarter, you're winning.
Example Net Worth Calculation
Sarah, age 30:
Assets:
- Checking account: $3,000
- Savings account: $8,000
- 401(k): $25,000
- Roth IRA: $12,000
- Car value: $15,000
Total assets: $63,000
Liabilities:
- Student loans: $18,000
- Auto loan: $10,000
- Credit card: $2,000
Total liabilities: $30,000
Net worth: $63,000 - $30,000 = $33,000
Net Worth Benchmarks by Age
The Federal Reserve's Survey of Consumer Finances provides median and average net worth by age. The median is a better reference point:
- Under 35: Median $39,000
- 35-44: Median $135,000
- 45-54: Median $247,000
- 55-64: Median $364,000
- 65-74: Median $409,000
😰 Net Worth Killers
- High-interest credit card debt
- Depreciating assets (new car loans)
- No retirement contributions
- Lifestyle inflation with raises
- No emergency fund (forces debt)
😊 Net Worth Builders
- Pay off high-interest debt first
- Max employer 401(k) match
- Invest consistently (even small amounts)
- Buy appreciating assets
- Live below your means
How to Grow Your Net Worth
There are only three ways to increase net worth:
- Increase assets: Save more, invest more, earn more
- Decrease liabilities: Pay down debt, avoid new debt
- Both simultaneously: The fastest path — save/invest while paying off debt
Quick Wins
- Pay off credit cards (highest interest first) — immediate net worth increase
- Contribute to 401(k) up to employer match — your net worth grows 2x faster with matching
- Build emergency fund — prevents future debt that would decrease net worth
- Avoid car loans on depreciating assets — buy reliable used cars
Track Your Net Worth Over Time
Calculating your net worth once is useful. Tracking it monthly or quarterly is powerful. When you see the number going up consistently, it motivates you to keep going. When it dips, you catch problems early.
Watch Your Net Worth Grow
Money Monit tracks your assets, debts, and spending to give you a clear picture of your net worth — and how it changes over time.
Know Your Number
Track your net worth and watch it grow. Assets, debts, and spending — all in one place.
Start Tracking Free