What is net worth, and how do you calculate it?
Net worth is the simplest measure of your financial position: everything you own, minus everything you owe. It matters because it shows direction. Income tells you what you earn; net worth tells you what you keep.
The formula
Net worth = assets - liabilities. Assets are what you own and could sell or withdraw: cash, savings, investments, retirement accounts, a car, property. Liabilities are what you owe: loans, mortgage, credit card balances, money you borrowed from people.
What to include
Everyday possessions such as furniture and clothes are usually left out, because they do not turn into cash in a way that helps your plans.
- Cash and bank balances, including savings.
- Investments and retirement accounts at their current value.
- Property and vehicles at a realistic resale value, not what you paid.
- Debts at the amount still remaining, not the original amount.
An example
Cash and savings 12,000, investments 20,000, a car worth 9,000: assets of 41,000. A car loan with 6,000 left and a credit card balance of 1,000: liabilities of 7,000. Net worth: 34,000.
How often to measure
Once a month is enough. Net worth moves slowly, and checking more often only adds noise from market swings. Look at the trend over months and years, not at a single reading.
How to grow it
- Spend less than you earn, so the gap adds to assets.
- Pay down high-interest debt.
- Invest regularly for the long term.
- Keep valuing the things you own, so the picture stays honest.
How Financio helps
Financio adds up your confirmed account balances, what you own and what you owe into one number and one history, across accounts and currencies, and shows it over six months, a year or all time.
Frequently asked questions
Can net worth be negative?
Yes, for example when you owe more than you own, which is common with student loans or a new mortgage. What matters is the direction over time.
Should I include my home?
Yes, at a realistic market value, and include the mortgage that is still owed. Some people also look at net worth without the home to see their liquid position.
What is a good net worth for my age?
It depends on your country, income and goals, so comparisons are only a rough guide. Your own trend is the more useful number.
These guides are general information, not financial, tax or legal advice.