How to Calculate Net Worth
The formula takes ten seconds; gathering honest numbers takes twenty minutes. Here is the exact process, what to include, and the valuation traps to avoid.
List every asset at fair market value, list every debt at payoff balance, subtract. Use realistic values for homes and cars, count retirement accounts at statement value, and ignore small household goods. Recalculate quarterly to track the trend.
Step 1: list every asset
Write down cash, checking and savings, investment and retirement accounts at current statement values, your home at realistic market value, vehicles at resale value, and any business interests or valuable property.
Be honest on the big three: homes, cars, and businesses. Check recent comparable sales for the house, a pricing guide for the car, and a conservative multiple for a business. Optimism here only lies to yourself.
Step 2: list every liability
Mortgage balance, home equity loans, car loans, student loans, credit card balances, personal loans, medical debt, and any money owed to family. Use payoff balances, not original amounts.
Do not forget the quiet ones: buy-now-pay-later balances, tax bills owed, and co-signed loans you are on the hook for. If you would have to pay it, it counts.
Step 3: subtract and interpret
Assets minus liabilities is your net worth. Positive means you own more than you owe; negative means the reverse, which is common for young borrowers and new homeowners.
Now make it useful: save the number with today's date and repeat quarterly. A rising line means wealth is compounding; a flat line despite good income means spending is eating the surplus. The calculator on this page does the arithmetic in seconds.
Skip the arithmetic
Run your numbers with the free net worth calculator.
Calculating net worth questions
Do I include my car in net worth?
A $20,000 car with a $15,000 loan adds $5,000 to net worth. An underwater loan subtracts. Because cars depreciate fast, many people find their vehicles are nearly net-worth-neutral, which is itself a useful insight.
Should retirement accounts count?
Count 401(k)s and IRAs at statement value. The 10 percent early-withdrawal penalty is a cost of accessing them young, not a reason to pretend they do not exist. For most savers, retirement accounts are the largest asset line.