Do you know how much you are actually worth? Your net worth sums up the current value of what you own minus what you owe to give you a bottom-line dollar amount representing your financial situation—so it is an important metric to track over time as it indicates whether your financial health is improving or declining. Your net worth is a big-picture snapshot of your financial health, and tracking it can show whether habits like saving and debt repayment are positively impacting your money.
How to calculate your net worth
Know your total assets
Calculating net worth starts with tallying all current assets, which may include:
Cash accounts like savings and checking accounts
Investment accounts such as retirement plans and brokerages
The estimated current resale value of your home
The value of vehicles or other property owned
Next, account for debts
The next step is to understand the total debts you currently hold, which may consist of:
Mortgage loan balance
Auto loans
Student loans
Credit card balances
Any other outstanding loans
Subtract debts from assets
Once you have identified current cash values for both assets and debts individually, simply subtract your debts from assets to calculate your net worth.
For example: Total assets = $300,000; total debts = $150,000; net worth = $150,000.
Simply put, your net worth = assets - liabilities. There are more specific online calculators to use as well.
Track changes over time
The power of knowing your net worth comes from tracking it over regular intervals, such as quarterly or annually. As you repay debts and accumulate additional assets, you will see your total net worth rise, indicating positive financial growth.
Having clarity on your complete financial picture allows you to make better decisions improving your situation over time. Do the math to calculate your current net worth—you may be wealthier than you think.