Net Worth Calculator
1. Assets (What You Own)
2. Liabilities (What You Owe)
Total Assets:
Total Liabilities:
Your Net Worth:
How to Calculate Your Net Worth
Your net worth is the single most important metric for measuring your financial health. It provides a "snapshot" of your financial position at a specific point in time. In simple terms, net worth is what you own minus what you owe.
The Net Worth Formula
The mathematical formula for net worth is straightforward:
Net Worth = Total Assets − Total Liabilities
Understanding Assets vs. Liabilities
To get an accurate calculation, you must correctly categorize your finances:
- Assets: These are items of value that can be converted into cash. This includes liquid cash in checking/savings accounts, retirement funds (401k, IRA), investment portfolios, the market value of your home, and resale value of vehicles or jewelry.
- Liabilities: These are financial obligations or debts. Common examples include your mortgage principal balance, auto loans, student loans, personal loans, and any outstanding credit card balances.
Example Calculation
Scenario:
- Assets: $10,000 (Savings) + $300,000 (Home) + $15,000 (Car) = $325,000
- Liabilities: $220,000 (Mortgage) + $5,000 (Credit Cards) = $225,000
- Calculation: $325,000 – $225,000 = $100,000 Net Worth
Why Tracking Net Worth Matters
Unlike your salary, which is just an income stream, net worth shows you if you are actually building wealth. A person earning $200,000 a year who spends it all and has high debt might have a lower net worth than someone earning $60,000 who saves and invests diligently. Tracking this monthly or yearly helps you see if you are moving toward financial independence.
Tips to Increase Your Net Worth
1. Pay down high-interest debt: Reducing liabilities is the fastest way to see the "Net Worth" number climb.
2. Automate savings: Treating your investments as a non-negotiable bill ensures your assets grow over time.
3. Appreciating Assets: Focus on buying things that go up in value (like stocks or real estate) rather than things that lose value (like new electronics or designer clothes).