Skip to main content

How To Calculate Your Net Worth

Do you know how much you are worth? Determining your net worth is the first step towards achieving your long-term financial goals.

Do you know how much you are worth? Determining your net worth is the first step towards achieving your long-term financial goals.

You can work out what your net worth is by adding up the value of your assets and reducing the figure that you arrive at by the debts that you owe. The result, your net worth, is a good indicator of your financial health.

Everything that you own – including your house, car, financial assets, art, jewellery, and cash – will help to increase your net worth. The sums that you owe – which include your mortgage and credit card debt – will reduce it.

Of course, a single figure does not tell the full story. For example, your net worth may include the value of your house, and this will probably be a large figure. It will be reduced by your credit card debt, which may be relatively small, but nevertheless is a sign of financial stress.

To illustrate this point, consider a person who owns a house valued at US$1 million. This individual also regularly rolls over credit card debt of an amount of US$50,000. The high rate of interest that is payable to the card issuer indicates that the person is facing difficulties in meeting daily expenses. But this symptom of poor financial health will not be reflected in the individual’s net worth.

Despite the shortcomings of this type, calculating your net worth can be a very useful exercise. It provides a snapshot of your financial well-being, and is also a useful metric to track your wealth. Calculating it on a regular basis helps you to determine whether you are becoming richer or poorer over time.


What is the process that you must follow to calculate your net worth? Firstly, you will have to collect all the data regarding your various financial assets.

This list of assets could include:

Details about the balances in your bank accounts.

A list of your shares, bonds, and other securities.

The value of your insurance policies. A term policy doesn’t count because there is no cash value to it.

An estimate of the value of your house and any other properties that you own.

If you own or part-own a business, the value of your share.

The approximate worth of your car, jewellery, art, and expensive furniture.

The total sum that you arrive at will need to be reduced by your liabilities.

These liabilities could include:

The amount that you owe on your mortgage.

Any loans that you have taken, including your credit card debt and car loan.

While you can carry out a calculation on a piece of paper or on an excel sheet, there are also various online tools that you can use to determine your net worth. The calculators from Investopedia and Bankrate are simple to use and also provide you with reports that help to track your progress.


Calculating your net worth will help you to better understand your financial position. The process is somewhat similar to making a company’s balance sheet. But it is much simpler and would take only a few minutes if you have all the relevant data ready.

Figuring out your net worth enables you to gauge your financial health and get a better sense of the overall picture. At times, people concentrate only on their income and disregard the importance of creating financial assets. Although earning a high income is definitely important, you should pay an equal amount of attention to what you do with your earnings.

Does all your money go into meeting your regular expenses? Or do you set aside some amount every month towards your long-term financial goals? Monitoring your net worth will help you to answer these questions.


Is your net worth rising or falling? It’s a good idea to monitor it on a monthly basis. A half-yearly or a yearly review can also suffice, but it’s easy to lose track of your finances if you don’t monitor them regularly.

A young person would usually have a low net worth. But over the years, most individuals would witness a rise in their level of wealth. In your 30s, you would probably start allocating greater amounts to your investments. You may also borrow a large amount to acquire your own home. This would result in an increase in the level of your assets. It would also lead to a rise in the amount that you owe.

However, individuals in the 40 to 60-year age group would usually see a steady rise in their net worth. At this stage, a person’s income would usually rise and an increasing portion of the mortgage would get paid off.

Finally, you can expect your net worth to start falling in your retirement years. When you stop working, it is likely that you would draw upon savings to pay for your expenses.

What’s the best way to increase the size of your net worth? You can speed up the pace of growth by allocating greater sums to your investments. Additionally, you should pay off outstanding loans as quickly as you can. Tracking your net worth on a regular basis will allow you to see how fast it is growing.


Calculating your net worth serves several useful purposes. It is a good indicator of your financial health, helping you to keep track of all your investments and accounts. Monitoring these periodically will remind you to take corrective action where it is necessary.

It is also a good way to motivate yourself to control your expenses and to allocate greater amounts to paying off your debts, so that you can ensure you are on track to achieving your long-term financial goals.

End of content

No more pages to load