Net worth is a fundamental metric in personal finance, representing the overall financial health of an individual or entity. It's a snapshot of your financial position at a specific point in time, calculated by subtracting your total liabilities (what you owe) from your total assets (what you own).
What are Assets?
Assets are anything you own that has monetary value. They can be broadly categorized into:
Liquid Assets: These are assets that can be quickly converted to cash, such as cash on hand, checking account balances, and savings account balances.
Investments: This includes the value of stocks, bonds, mutual funds, exchange-traded funds (ETFs), cryptocurrencies, and other investment vehicles held in brokerage or retirement accounts.
Real Estate: The estimated market value of properties you own, including your primary residence, vacation homes, and investment properties.
Personal Property: This covers the value of significant personal possessions like vehicles, jewelry, collectibles, and furniture. It's important to be realistic about the resale value, not the purchase price or sentimental value.
Other Assets: This can include any other valuable items or rights you possess, such as business ownership stakes or intellectual property.
What are Liabilities?
Liabilities are all the debts and financial obligations you owe to others. Common liabilities include:
Short-Term Debts: Such as credit card balances that need to be paid off quickly.
Long-Term Debts: Including student loans, car loans, personal loans, and the outstanding balance on mortgages.
The Net Worth Formula
The calculation is straightforward:
Net Worth = Total Assets – Total Liabilities
In this calculator, we sum up all the values you enter for assets and then sum up all the values for liabilities. Finally, we subtract the total liabilities from the total assets to arrive at your net worth.
Why is Net Worth Important?
Financial Health Indicator: A positive and growing net worth generally signifies good financial health and progress towards financial goals.
Goal Setting: It helps you track progress towards major financial milestones like retirement or purchasing a home.
Informed Decision-Making: Understanding your net worth can inform decisions about saving, investing, and debt management.
Comparison: While not the sole measure, it allows for a broad comparison of financial standing over time or against financial benchmarks.
How to Use This Calculator
Simply enter the current estimated value of all your assets and the outstanding balance of all your liabilities in the respective fields. Click "Calculate Net Worth" to see your financial snapshot. It's recommended to perform this calculation at least once a year to monitor your financial progress.
function calculateNetWorth() {
var cashChecking = parseFloat(document.getElementById("cashChecking").value) || 0;
var cashSavings = parseFloat(document.getElementById("cashSavings").value) || 0;
var investmentAccounts = parseFloat(document.getElementById("investmentAccounts").value) || 0;
var retirementAccounts = parseFloat(document.getElementById("retirementAccounts").value) || 0;
var realEstateValue = parseFloat(document.getElementById("realEstateValue").value) || 0;
var otherAssets = parseFloat(document.getElementById("otherAssets").value) || 0;
var creditCardDebt = parseFloat(document.getElementById("creditCardDebt").value) || 0;
var studentLoans = parseFloat(document.getElementById("studentLoans").value) || 0;
var carLoans = parseFloat(document.getElementById("carLoans").value) || 0;
var mortgageBalance = parseFloat(document.getElementById("mortgageBalance").value) || 0;
var otherLiabilities = parseFloat(document.getElementById("otherLiabilities").value) || 0;
var totalAssets = cashChecking + cashSavings + investmentAccounts + retirementAccounts + realEstateValue + otherAssets;
var totalLiabilities = creditCardDebt + studentLoans + carLoans + mortgageBalance + otherLiabilities;
var netWorth = totalAssets – totalLiabilities;
var netWorthValueElement = document.getElementById("netWorthValue");
if (!isNaN(netWorth)) {
netWorthValueElement.textContent = "$" + netWorth.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 });
} else {
netWorthValueElement.textContent = "Invalid Input";
}
}