How to Calculate Your Net Worth: The Simple Formula to Track Wealth
Your income is what you earn. Your net worth is what you keep. Most people focus obsessively on the first number and barely think about the second — which is why so many high earners end up with little to show for decades of work.
The Net Worth Formula
This couldn't be simpler:
Net Worth = Total Assets − Total Liabilities
Assets = everything you own that has value
Liabilities = every debt or financial obligation you owe
If your assets add up to $280,000 and your liabilities are $190,000, your net worth is $90,000. Simple arithmetic — but most people have never sat down to actually do it.
What Counts as an Asset?
Be thorough here. Include everything:
Liquid Assets
- Checking and savings accounts
- Cash
- Money market accounts
- CDs and short-term bonds
Investment Assets
- 401(k), IRA, Roth IRA balances
- Brokerage accounts (stocks, ETFs, bonds)
- Crypto holdings (at current market value)
- Business ownership stakes
Physical Assets
- Home equity (current market value, not the purchase price)
- Investment property equity
- Vehicle value (use Kelley Blue Book)
- Jewelry, collectibles, or equipment with resale value
Important: Use current market value, not what you paid. Your home bought for $250,000 that's now worth $380,000 contributes $380,000 to your assets. Your retirement accounts should reflect today's balance.
What Counts as a Liability?
- Mortgage balance (not your monthly payment — the total remaining balance)
- Car loan balance
- Student loan balance
- Credit card balances
- Personal loan balances
- Medical debt
- Business loans you've personally guaranteed
- Any other money you legally owe
A Realistic Net Worth Calculation Example
| Assets | Value |
|---|---|
| Home market value | $385,000 |
| 401(k) balance | $112,000 |
| Savings account | $22,000 |
| Vehicle (KBB value) | $21,000 |
| Brokerage account | $18,500 |
| Total Assets | $558,500 |
| Liabilities | Balance Owed |
|---|---|
| Mortgage remaining | $247,000 |
| Car loan | $13,500 |
| Student loans | $11,000 |
| Credit card balance | $3,200 |
| Total Liabilities | $274,700 |
Net Worth = $558,500 − $274,700
Net Worth = $283,800
What Is a Good Net Worth by Age?
According to the Federal Reserve's Survey of Consumer Finances, here are median net worth figures by age in the United States:
| Age Range | Median Net Worth | Mean Net Worth |
|---|---|---|
| Under 35 | $39,000 | $183,500 |
| 35–44 | $135,600 | $549,600 |
| 45–54 | $247,200 | $975,800 |
| 55–64 | $364,500 | $1,566,900 |
| 65–74 | $409,900 | $1,794,600 |
Notice the enormous gap between median and mean. A small number of ultra-wealthy households skew the average dramatically. Use the median as your benchmark — it represents the actual middle of American households.
The "Millionaire Next Door" Benchmark
Thomas Stanley's research produced a widely cited rule of thumb for whether your net worth is on track given your income:
Expected Net Worth = Age × Annual Pre-Tax Income ÷ 10
"Prodigious accumulators of wealth" have twice this amount or more.
A 42-year-old earning $80,000/year should have a net worth of about $336,000 to be "on pace." This isn't a hard rule — career timing, location, and inherited wealth all matter — but it's a useful gut check.
💡 Track It Quarterly, Not Daily
Net worth fluctuates with market prices. Your home's Zillow estimate and your 401(k) balance change constantly. Calculate net worth every 3–6 months for a meaningful trend line. The goal is consistent growth over years — not optimization of this month's number.
Strategies to Build Net Worth Faster
- Maximize tax-advantaged accounts first: 401(k) up to the match, then IRA, then taxable brokerage. The tax savings compound enormously over time.
- Attack high-interest debt aggressively: Any debt above 6–7% interest is like a guaranteed negative return on your capital.
- Don't over-count your home: You need somewhere to live, so home equity isn't as liquid as investment assets. Build financial assets too.
- Avoid lifestyle inflation: The biggest wealth killer for high earners is spending rising income rather than investing it.
Calculate Your Net Worth Today
Use our tools to build a complete financial picture: start with our retirement calculator to see if your net worth is on track for your retirement goals, and our compound interest calculator to model how your investable assets will grow over time.
Are You On Track for Retirement?
See if your current net worth will support your retirement lifestyle — and what to do if it won't.
Go to Retirement Calculator →