Calculating Your Net Worth

There are many ways to measure your financial progress, but perhaps the most informative measurement is your net worth. 

Net worth is simply a measure of how much wealth you (or your household) have. It’s calculated by taking your total assets and subtracting your total debts. 

This guide will go over how to calculate total assets and total liabilities, how to calculate your net worth — and what your net worth means for your overall financial well-being. 

What is net worth?

Net worth is the value of the assets you own, minus the liabilities (debts) you owe. 

For example, if you own $10,000 in stocks, a $7,000 vehicle and have $3,000 in your bank account, your total assets would be worth $20,000. 

But to find your net worth, you’d need to subtract your debts from that $20,000. Here are a few examples:

• If you are debt-free, your net worth would be $20,000

• If you had $10,000 in debt, your net worth would be $10,000

• If you had $16,000 in debt, your net worth would be $4,000

• If you had $35,000 in debt, your net worth would be negative $15,000

It doesn’t matter what types of assets you own or what types of debt you have. Net worth simply takes the total value of your assets and subtracts the total value of your debts. 

How do I calculate my net worth?

A tangible net worth calculation doesn’t need to be complicated. It starts with figuring out how to calculate total assets, then adding up total liabilities (debts). 

The formula for net worth is simply:

(Total assets) - (total liabilities) = net worth. 

Let’s break it down. 

How to calculate total assets

An asset is any piece of property that you own and that has value.

Examples of assets include:

• Stocks or mutual funds

• Bonds

• Cash

• Savings/checking account balances

• Vehicles

• Real estate

• Collections

• Expensive jewelry or possessions

You can make a list of all your assets, along with estimated values for them. Some assets have a clearly defined value ($1,000 in a savings account is worth exactly $1,000), while others may require some research. 

For example, you may need to use a tool like Kelley Blue Book to determine your vehicle’s value, or Zillow to estimate your home’s value. 

For assets that change values frequently (like stocks), simply use the current market value on the day you do your net worth calculation. 

You can get as specific as you want, but for most people, it’s helpful to ignore smaller items. You don’t need to include the value of a used TV that’s worth $200, for example. 

Once you’ve listed all your asset values, add them up to find your total asset value. 

How to calculate total liabilities

A liability is something that you owe to someone else. It’s another word for debt. 

Examples of liabilities include:

• Car loans

• Mortgages

• Personal loans

• Credit card balances

• Student loans

Make a list of all your liabilities along with the specific amounts that you owe on each. Use the most recent balances — you don’t need to account for future interest or other associated costs. Calculating your net worth is simply a snapshot of your net worth at that particular time. 

The result of this calculation is your total liabilities. 

How to calculate net worth

Now you’ve got the numbers for your total assets and total liabilities. 

To calculate net worth, just subtract total liabilities from total assets. 

For example, if you have $80,000 in assets and debts of $50,000, your net worth is $30,000.

Net worth example

Assets

• House = $440,000

• Retirement account = $105,000

• Vehicle 1 = $20,000

• Vehicle 2 = $6,000

• Savings account = $8,000

• Checking account = $4,000

• Miscellaneous = $2,000

Liabilities

• Mortgage balance = $350,000

• Vehicle loan = $16,000

• Student loans = $25,000

• Credit cards = $2,000

Total assets = $585,000

Total liabilities = $393,000

Net worth = $192,000 ($585,000 - $393,000)

Is my net worth on track?

Now that you know your net worth, what should you do with this information?

There are a few different approaches. 

The most beneficial strategy is to compare your current net worth with your financial goals. 

• Want to become a millionaire? Is your current net worth reflective of that goal?

• Want to build generational wealth? Will you have enough to live on in retirement and pass wealth down to the next generation?

• Want to retire early? Do you have a plan in place and is your current net worth on track to meet your goal? 

It’s best not to compare ourselves to others, but when it comes to finances, looking at the average net worth of someone your age can provide some useful insights. 

Average net worth by age

To do this, we can look at the average net worth for American households. More specifically, we should look at the median net worth, because the average is skewed higher by extremely wealthy households. 

The overall median net worth for American households is $121,700. 

It’s also helpful to look at a breakdown for different age groups. 

Median household net worth by age group

Age of head of household - Median net worth - Average net worth

• Under 35 - $13,900 - $76,300

• 35-44 - $91,300 - $436,200

• 45-54 - $168,600 - $833,200

• 55-64 - $212,500 - $1,175,900

• 65-74 - $266,400 - $1,217,700

• Over 75 - $254,800 - $977,600

Again, comparing yourself to these averages is less useful than comparing your current progress to your specific financial goals. If you are happy with your net worth, that’s what really matters. 

How to increase your net worth

There are two ways to increase your net worth:

• Increase your assets

• Pay off debt

After figuring out how to calculate assets, you can increase your assets by starting to invest or saving more money by starting a budget. 

But in many cases, it’s paying off debt that can make the biggest difference in your net worth.  

Debt is the opposite of investment: It costs you money every month and drains your finances. This is particularly true for high-interest debt, like credit cards. 

If you have credit card debt, consider managing credit card debt with Tally.† Tally helps qualifying applicants get out of credit card debt faster while paying less interest. 

†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. Based on your credit history, the APR (which is the same as your interest rate) will be between 7.90% - 29.99% per year. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.