Your bank app shows what you have, and your loan statements show what you owe, but neither one shows your net worth.
Net worth is one number that shows where you stand with money: what you'd have left if you sold everything you own and paid off everything you owe. A car shows how this works: if it's worth $9,000 and you still owe $7,500 on it, the car adds $1,500 to your net worth, not $9,000.
Knowing your net worth matters because that one number puts your savings, your 401(k) and your debts together, instead of spread across your bank app and loan statements.
Working it out takes three steps: add up what you own, add up what you owe and subtract, using a fill-in table for your own numbers. Redo the math every few months, and you'll see whether your net worth is going up.
To learn how to research the investments that move a 401(k) balance, join our free investor livestream on November 17, where CEO Jaspreet Singh shows how to use ChatGPT and Claude like a pro.
The Net Worth Formula
Here's the whole formula: what you own minus what you owe equals your net worth. If you own more than you owe, the number is positive, and if you owe more, it's negative.
Assets are the things you own that have value, like cash, retirement accounts and a car. Liabilities are the debts you owe, and our guide to assets vs liabilities explains the difference in more depth.
Step 1: Add Up What You Own
Start with everything you own. List each item and what it's worth today:
- Cash: Checking and savings balances.
- Retirement accounts: Your vested 401(k) balance or IRA balance.
- Other investments: Brokerage accounts and similar holdings.
- Your home: What it would sell for today, if you own one.
- Your car: What it would sell for today.
Use what things are worth today, not what you paid, as the University of Illinois Student Money Management Center says. The same post also notes that smaller belongings are usually a small part of the total and may not be worth pricing item by item, so you can skip them.
Does a 401(k) count toward net worth?
Yes, at its current vested balance, the part you own. The University of Illinois post lists retirement accounts such as 401(k)s with investment assets, and our guide on what a 401(k) is covers how one works.
A 401(k) balance can go up or down with the stock market, so your net worth will move with it. Investing involves risk including loss, and past performance does not indicate future results.
Step 2: Add Up What You Owe
Next, list every debt at what you still owe today:
- Credit cards
- Car loans
- Student loans
- A mortgage
- Personal loans
- Buy now, pay later balances
Use the payoff balance from each statement or app, not the original loan amount.
Step 3: Subtract
Now subtract one total from the other. This table works as a simple net worth calculator, so fill in your own numbers next to the example:
| What you own | Example | Yours |
|---|---|---|
| Checking | $1,200 | |
| Savings | $2,000 | |
| Vested 401(k) balance | $8,500 | |
| Car (what it would sell for today) | $9,000 | |
| Total you own | $20,700 |
| What you owe | Example | Yours |
|---|---|---|
| Credit card | $3,000 | |
| Car loan | $7,500 | |
| Student loans | $12,000 | |
| Total you owe | $22,500 |
| Example | Yours | |
|---|---|---|
| Net worth (own minus owe) | $20,700 minus $22,500 = minus $1,800 |
In the example, the car is worth $1,500 more than its loan. The card and student loans ($15,000) outweigh the cash and 401(k) ($11,700), which is what pulls the total below zero.
If the $3,000 card is paid off from income over the next year and nothing else changes, net worth rises by $3,000, to $1,200. Every number here is an example.
What Your Number Means
Once you've subtracted, you'll have one number, and it might be below zero. A negative number is not unusual, especially early on or while you're paying down debt.
The University of Illinois post says that whether your number is going up over time matters more than where it starts. A net worth list works like a personal balance sheet, with what you own on one side and what you owe on the other.
In the example above, paying off the $3,000 card would move net worth from minus $1,800 to $1,200.
What should my net worth be at 40?
There's no single right number for any age. Compare today's total with your own total from a year ago instead.
How to Track Your Net Worth
Your first number is a starting point, and the next one shows whether you're making progress. Work it out every quarter or every year, as the University of Illinois post suggests, and use the same date each time.
Using the same dates, like January 1, April 1, July 1 and October 1, keeps the comparison fair. Write each total down so the next check has something to compare against.
If you want to follow your money between those checks, the Briefs money tracker tracks your income, your expenses and the 75/15/10 split in one place, and it projects years ahead to show the month you go green.
How to Grow Your Net Worth
To grow your net worth, you either add to what you own or cut what you owe. The Climb to Wealth class teaches an order that does both: save your first $2,000, pay off credit card debt in the right order, then automate it so you're not relying on willpower.
Saving adds to what you own, and paying down cards lowers what you owe. The University of Illinois post lists the same kinds of moves: paying down high-interest debt, earning more, spending less, and building emergency savings and long-term investments.
Earning more can mean a raise or a way to add a second income stream.
Questions People Ask About Net Worth
Is my home part of my net worth?
Yes. The home is something you own and the mortgage is something you owe, and the difference between them is your home equity, as the University of Illinois post explains.
If you rent, there's no home on either side of the list. Our guide on renting vs buying walks through that choice.
Your Net Worth, Start to Finish
- Net worth is what you own minus what you owe.
- Add up today's value of your assets, add up today's balances on your debts and subtract.
- Repeat it on the same date each quarter or year and compare the new total with the last one.
Fill in the "Yours" column today, write the date next to your total and set a reminder for the same date three months from now.
To keep learning what builds wealth over time, join our free investor livestream on November 17, where CEO Jaspreet Singh will research stocks live with ChatGPT and Claude.
