Net Worth Calculator

Calculate your actual net worth using our free and visually interactive net worth calculator. Our net worth calculator by age will also estimate what your net worth should be. We also answer the questions of what is net worth, net worth meaning, and we define net worth.Learn More

A FREE & Visually Interactive Net Worth Calculator
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Net Worth Calculator

How is Net Worth Calculated

To learn how to calculate net worth, you need to understand what your assets and debt are. Your net worth is calculated by subtracting all debt from assets.

An asset is anything you own that has monetary value Your debt (also known as liabilities) is anything you owe.

In other words, whatever is left after selling all assets and paying off personal debt is the net worth.

What is Net Worth

Net worth is an important metric to gauge a person’s financial health, it’s a snapshot at a point in time of current assets minus current debt.

The net worth definition (net worth formula) is:

Net Worth = Assets - Debt

Assets include checking and savings account balances, the value of securities (e.g., stocks or bonds), real property value or the market value of an automobile.

Debt includes mortgages, credit card balances, student loans or car loans.

Net Worth Meaning

So what does net worth mean? The greater your net worth, the richer you are. The earlier you start saving to build wealth, the richer you will be.

Positive net worth means that assets exceed debt, while negative net worth results when debt exceed assets.

Positive and increasing net worth indicates good financial health while decreasing net worth is cause for concern as it might signal a decrease in assets relative to debt.

The best way to improve net worth is to either reduce liabilities while assets stay constant or rise, or increase assets while liabilities either stay constant or fall.

You can calculate your future net worth to see what your wealth creation will look like over many years. Tracking your net worth throughout your life will give you a more encapsulating understanding of your financial health than simply tracking expenses.

An increase of net worth - for most - comes through the saving of job income and appreciation in value of one's home and investments. Many saw a major swing in their net worth with the real estate boom over the past years. Assets are key to build net worth.

What is My Net Worth

The book great - Millionaire Next Door - suggests multiplying your age by your income and dividing by ten to estimate your net worth. This gives us a net worth calculator by age, or a net worth calculator to estimate net worth at any age. It helps answer the question of what is my net worth for any age.

The net worth formula (net worth definition) to calculate what you should be worth is:

Suggested Net Worth = Age x Income / 10

The net worth formula assumes that your net worth commensurate with your age and income. Where you live and costs of living can skew what you should be worth directly and indirectly through your income and ability to accumulate assets, obtain debt and paydown your debt off.

Net Worth Example

Consider a couple with assets, including a primary residence valued at $250,000, an investment portfolio with a market value of $100,000, and automobiles and other assets valued at $25,000. Debt includes an outstanding mortgage balance of $100,000 and a car loan of $10,000.

The couple's net worth would therefore be calculated as [$250,000 + $100,000 + $25,000] - [$100,000 + $10,000] = $265,000

Assume that five years later, the couple's financial position changes: the residence value is $225,000, investment portfolio $120,000, savings $20,000, automobile and other assets $15,000; mortgage loan balance $80,000, and car loan $0 (paid off). The net worth five years later would be [$225,000 + $120,000 + $20,000 + $15,000] - $80,000 = $300,000.

In other words, the couple's net worth has gone up by $35,000 despite the decrease in the value of their residence and car. The increase in net worth is because the decline in residence value was more than offset by increases in other assets (e.g., investment portfolio and savings), as well as the decrease in liabilities.

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