How to Calculate Net Worth: A Step-by-Step Guide

Most people track income — how much hits the bank each month — and ignore the only number that actually measures wealth: net worth. Net worth is what you would have left if you sold everything you own and paid off every cent you owe. It is the score line of personal finance, and it is the number every financial advisor looks at first.

The net worth formula

Net Worth = Total Assets − Total Liabilities

That is it. The arithmetic is trivial; the honesty required to fill in the two columns is what makes the exercise valuable. Do it once a quarter and you can see whether your financial decisions are actually moving the needle.

What counts as an asset?

An asset is anything you own that has cash value. The standard categories:

• Cash & equivalents — checking, savings, money market funds, fixed deposits.
• Investments — stocks, ETFs, mutual funds, bonds, retirement accounts (401(k), IRA, ISA, KiwiSaver, etc.), crypto.
• Real estate — primary home, rental properties, land — valued at current market price, not what you paid.
• Vehicles — cars, boats, motorbikes — at current resale value (KBB, Autotrader). Cars usually lose 15–25% of value in year one.
• Business equity — your stake in a private business, at a defensible valuation.
• Other — collectibles, jewellery, art — only if you would actually sell them.

Be ruthless with valuations. Zillow estimates are optimistic; second-hand prices are lower than you think. Conservative numbers protect you from feeling rich when you are not.

What counts as a liability?

Liabilities are everything you owe:

• Mortgages — outstanding principal, not the original loan.
• Auto loans — current payoff balance.
• Student loans — total remaining balance, not monthly payment.
• Credit card debt — full statement balance, not minimum payment.
• Personal loans, BNPL, family loans.
• Tax owed — estimated tax bill you have not yet paid.

A worked example

A 35-year-old in the US might look like this:

• Cash: $8,000
• 401(k): $62,000
• Roth IRA: $24,000
• Brokerage: $11,000
• Home: $380,000
• Car: $14,000
• Total assets: $499,000

Liabilities:

• Mortgage: $290,000
• Auto loan: $9,000
• Credit cards: $3,500
• Student loans: $18,000
• Total liabilities: $320,500

Net worth = $178,500.

Average net worth by age (Federal Reserve / ONS / ABS / StatCan)

Approximate medians, 2024 data, USD-equivalent:

• Under 35: US $39k · UK £25k · AU $90k · CA $48k
• 35–44: US $135k · UK £93k · AU $295k · CA $235k
• 45–54: US $247k · UK £230k · AU $400k · CA $521k
• 55–64: US $364k · UK £350k · AU $530k · CA $691k
• 65–74: US $410k · UK £315k · AU $620k · CA $543k

Means are 3–5× higher because top earners drag the average up. Compare yourself to the median for a more honest benchmark.

5 proven ways to increase your net worth

1. Automate retirement contributions. Money you never see can't be spent. Even 10% of gross income makes a massive long-run difference. 2. Kill high-interest debt first. A 22% credit card APR beats almost any investment return. 3. Buy assets, not depreciating toys. A used Toyota and a sensible house outperform a luxury car and a starter home you can't actually afford. 4. Increase income, not just savings. A $10k raise compounds for decades. 5. Track quarterly. What gets measured, gets managed.

Frequently asked questions

Should I include my home in net worth? Yes, at market value minus mortgage. Some advisors track "investable net worth" separately, which excludes your primary residence.

What about pensions? Defined-contribution pensions (401(k), Super, RRSP) are assets at current balance. Defined-benefit pensions are trickier — include the lump-sum equivalent if your scheme provides one.

Is a negative net worth normal? Common in your 20s if you have student loans — getting to zero is itself a milestone. Use our Savings Goal Calculator to plan the climb.

Track yours every quarter — over 10 years the line will tell you more about your financial life than any budget ever could.