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I remember the first time I calculated my net worth. I expected a number that would make me feel good about all those years of working. Instead, I got a negative number. Student loans, a car note, and credit card debt added up to more than everything I owned. It was uncomfortable to see — but it was also the most useful financial exercise I’d ever done, because for the first time I could see the full picture.
Your net worth is the single most honest snapshot of your financial health. It doesn’t care about your job title, your salary, or what car you drive. It’s one number that tells you exactly where you stand — and once you know it, you can start making it grow. Here’s how to calculate yours in under 15 minutes, what the number actually means, and what to do with it regardless of whether it’s positive or negative.
What Is Net Worth?
Net worth is the difference between what you own (assets) and what you owe (liabilities). That’s it. The formula is simple:
Net Worth = Total Assets – Total Liabilities
If you own more than you owe, your net worth is positive. If you owe more than you own, your net worth is negative. Neither result defines your future — it simply tells you your starting point.
According to the Federal Reserve’s Survey of Consumer Finances, the median net worth for American families was $192,900 in 2022. But that number is heavily skewed by homeowners and older adults. For adults under 35, the median was just $39,000 — and for many people in their 20s, the number is negative due to student loans.
The point of calculating your net worth isn’t to compare yourself to national averages. It’s to establish a personal baseline so you can track your progress over time.
How to Calculate Your Net Worth Step by Step
Now that you understand what is net worth at a high level, let’s calculate yours. Grab a notebook, open a spreadsheet, or use one of the best free budgeting apps that track net worth automatically. This should take 10-15 minutes.
Step 1: List All Your Assets
Assets are everything you own that has monetary value. Be realistic — use current market values, not what you paid or what you hope something is worth.
Cash and savings:
- Checking account balance
- Savings account balance (including any high-yield savings accounts)
- Cash on hand
- Emergency fund
Investments:
- Retirement accounts (401k, IRA, Roth IRA)
- Brokerage accounts (stocks, bonds, index funds, ETFs)
- Cryptocurrency (current value)
- Health Savings Account (HSA)
Property:
- Home (current estimated market value — check Zillow or Redfin for a rough estimate)
- Vehicles (use Kelley Blue Book for fair market value, not what you paid)
- Valuable personal property (jewelry, collectibles, electronics — only if you could realistically sell them)
Other assets:
- Money owed to you
- Business equity
- Cash value of life insurance
Add everything up. That’s your total assets.
Step 2: List All Your Liabilities
Liabilities are every debt and financial obligation you currently owe. Include the full remaining balance, not the monthly payment.
Common liabilities:
- Mortgage balance (remaining principal)
- Student loan balance
- Auto loan balance
- Credit card balances (all cards combined)
- Personal loans
- Medical debt
- Money you owe to friends or family
- Buy now, pay later balances
- Any other outstanding debt
Add everything up. That’s your total liabilities.
Step 3: Subtract Liabilities From Assets
Take your total assets and subtract your total liabilities. The result is your net worth.
Example:
Total assets: $45,000 (savings: $8,000 + retirement: $12,000 + car: $15,000 + other: $10,000) Total liabilities: $62,000 (student loans: $35,000 + car loan: $18,000 + credit card: $9,000)
Net worth: $45,000 – $62,000 = -$17,000
That negative number can sting. But knowing it is infinitely more powerful than not knowing it. You now have a target to beat.
What Your Net Worth Number Actually Tells You
So what is net worth really telling you? It’s not a grade. It’s a GPS coordinate — it tells you where you are so you can navigate to where you want to be.
Negative net worth doesn’t mean you’re bad with money. It means your debts currently outweigh your assets, which is extremely common for people in their 20s and 30s who have student loans, car payments, or credit card debt. The goal is to make that number less negative over time, then cross into positive territory.
Zero net worth means your assets and debts are perfectly balanced. You’re at the break-even point, which is actually a milestone worth celebrating if you started in the negative.
Positive net worth means you own more than you owe. This doesn’t automatically mean you’re wealthy — someone with $200,000 in home equity and $195,000 in mortgage debt has a positive net worth of just $5,000. But the trajectory matters more than the number.
The most important thing about your net worth isn’t what it is today. It’s whether it’s growing. A person with -$30,000 net worth who improves by $10,000 per year is in a better position than someone with $100,000 net worth who’s spending it down.
Why Net Worth Matters More Than Income
Another way to understand what is net worth is to compare it to income. Income tells you how much money flows through your life. Net worth tells you how much actually stays.
You’ve probably heard stories of professional athletes or high-income earners who went broke. They had massive incomes but negative net worth because their spending and debt exceeded their assets. Meanwhile, there are teachers and civil servants who retire as millionaires because they consistently grew their net worth over decades.
Understanding this distinction is fundamental to financial literacy. Your income is a tool. Your net worth is the result of how you use that tool. If you want to understand more about how money grows when you manage it well, our guide on understanding interest rates explains the mechanics behind both debt growth and wealth growth.
How to Increase Your Net Worth
Growing your net worth comes down to two levers: increasing your assets and decreasing your liabilities. Here are the most effective strategies for both.
Increase Your Assets
Build your emergency fund. Having 3-6 months of expenses in a dedicated emergency fund protects your other assets from being wiped out by unexpected expenses. This is the foundation.
Contribute to retirement accounts. If your employer offers a 401(k) match, contribute at least enough to get the full match — it’s free money that immediately increases your net worth. Even small contributions compound dramatically over time.
Start investing. Once your emergency fund is solid and high-interest debt is managed, investing is how you accelerate asset growth. Index funds are a simple, low-cost starting point for beginners. Our guide on passive income ideas covers several ways to put your money to work.
Increase your income. Side hustles, freelancing, raises, and career moves all boost your ability to save and invest. More income only increases net worth if you direct the extra money toward assets — not just lifestyle inflation. Check out our guide to making extra money for actionable starting points.
Decrease Your Liabilities
Attack high-interest debt first. Credit card debt with 20%+ APR is the biggest drag on net worth. Every dollar you pay above the minimum directly increases your net worth. Understanding how APR affects your debt helps you prioritize which debts to eliminate first.
Avoid new debt for depreciating assets. Financing a vacation or a new TV decreases your net worth twice — you add a liability while buying something that loses value immediately. Learn to distinguish between good debt and bad debt before taking on any new obligations.
Make extra payments when possible. Even an extra $50/month on your student loans or car note reduces your total liabilities faster than the minimum payment schedule. The less you owe, the higher your net worth climbs.
Use the 50/30/20 framework. Allocating at least 20% of your income toward savings and debt repayment ensures consistent net worth growth every single month. Our guide on the 50/30/20 budget rule breaks this down step by step.
How Often Should You Calculate Your Net Worth?
I recommend calculating your net worth once per quarter — every three months. Monthly is too frequent because the numbers won’t change dramatically enough to be motivating. Annually is too infrequent because you lose the ability to spot trends and course-correct.
Pick a specific date — the 1st of January, April, July, and October works well. Track your numbers in a simple spreadsheet or use an app that calculates it automatically.
Over time, you’ll start to see the trajectory. That upward trend, even if it’s slow, is one of the most motivating things in personal finance.
Net Worth at Different Life Stages
Your net worth expectations should match your life stage. Here’s a general framework based on Federal Reserve data:
Under 25: Negative to $0 is normal. Most people this age have student loans and are early in their careers. The goal is to build good financial habits and start an emergency fund.
25-34: The median is around $39,000, but this varies wildly based on student debt, homeownership, and career path. Focus on eliminating high-interest debt and starting retirement contributions.
35-44: Median around $135,000. By this stage, consistent saving and investing start showing compound growth. Homeownership often plays a major role in net worth at this stage.
45-54: Median around $247,000. Peak earning years combined with reduced debt (if managed well) accelerate net worth growth.
55+: Median $364,000+. Retirement savings should be the dominant asset. The goal shifts from growth to preservation and income generation.
These are benchmarks, not judgments. Your personal trajectory matters more than where you fall on a national chart.
Start Tracking Your Net Worth Today
Now that you know what is net worth and exactly how to calculate it, there’s only one thing left to do — start tracking it. Your net worth is the most honest financial metric you have. It cuts through the noise of income, lifestyle, and appearances to show you exactly where you stand. Calculating it takes 15 minutes. Tracking it quarterly takes 15 minutes four times a year. That one hour per year of effort gives you more financial clarity than almost anything else you can do.
If you’re just beginning your financial education, our complete guide to financial literacy for beginners covers all the foundational concepts you need, and knowing your net worth is one of the most powerful starting points.
Grab a spreadsheet. List your assets. List your debts. Do the math. Whatever the number is — positive, negative, or zero — you now know your starting line.
FAQ Section
What is a good net worth for my age?
There’s no single “good” number because net worth depends heavily on income, location, debt history, and career stage. As a general benchmark, the Federal Reserve’s 2022 data shows median net worth of $39,000 for adults under 35 and $135,000 for ages 35-44. More important than hitting a specific number is seeing consistent growth in your net worth over time.
Is it normal to have a negative net worth?
Yes, especially in your 20s and early 30s. Student loans, car loans, and credit card debt commonly push net worth into negative territory for younger adults. A negative net worth simply means you owe more than you currently own — it’s a starting point, not a permanent condition. Focused debt repayment and consistent saving will move the number upward.
Should I include my car in my net worth calculation?
Yes, but use its current market value, not what you paid for it. Check Kelley Blue Book or a similar tool for a realistic estimate. If you still owe money on the car, include both the vehicle’s value as an asset and the remaining loan balance as a liability. For most people, the loan is higher than the car’s current value in the first few years.
Does my home count as part of my net worth?
Yes. Your home’s current estimated market value counts as an asset, and your remaining mortgage balance counts as a liability. The difference is your home equity, which is often the largest component of net worth for homeowners. Use a conservative estimate of your home’s value to avoid inflating your net worth on paper.
How is net worth different from income?
Income is what you earn. Net worth is what you keep. Someone earning $200,000 a year but spending all of it has zero net worth growth, while someone earning $50,000 who saves and invests consistently can build substantial net worth over time. Income is a flow of money; net worth is the accumulation of that flow minus debt.
What’s the fastest way to increase my net worth?
The fastest single action is paying off high-interest debt, particularly credit card debt. Every dollar of credit card debt you eliminate increases your net worth by that dollar while also stopping future interest charges from dragging it back down. Simultaneously building an emergency fund and automating savings creates a three-pronged approach that accelerates net worth growth.
Toyin Onagoruwa is the founding editor of BrokeMeNot. With over five years of experience in personal finance writing and a background in financial services, he helps everyday people navigate credit cards, budgeting, and smart money management. Connect with him on LinkedIn.