How to figure out your assets and liabilities to calculate your net worth.


By Jenny Hoff, Photo by Alexander Mils

Knowing your net worth can be very empowering. If you have financial goals, you need to know where you are starting so you can make a plan to reach them. Net worth has nothing to do with self-worth; it’s just a snapshot of where you are right now financially so you can build to where you want to be.

First things first, what is net worth? Simply put, it’s the difference between what you own (your assets) and what you owe (your liabilities). It’s a powerful financial metric that paints a clear picture of your financial standing at a specific point in time.

Assets: Your Financial Lifelines

Let’s begin by taking stock of your assets. These are the items of value that you own:

  • Savings and checking accounts: Start with your bank accounts, including checking and savings. Don’t forget to include any certificates of deposit (CDs) or money market accounts.
  • Investments: This includes your stock portfolio, bonds, mutual funds and retirement accounts like 401(k)s or IRAs. Add up their current values.
  • Real estate: The market value of your home(s) or any other properties you own. It’s essential to use current market values rather than what you originally paid.
  • Vehicles and personal property: If you have a car, consider its resale value. Include any valuable personal property, like jewelry or collectibles.
  • Business interests: If you own a business, estimate its net value after subtracting any business debts.
  • Liabilities: Your Financial Roadblocks

Let’s tackle your liabilities—the debts and obligations that you owe:

  • Mortgages: The remaining balance on your mortgages or any home equity loans.
  • Auto loans: The outstanding balance on any car loans.
  • Credit card debt: Add up the balances on all your credit cards.
  • Student loans: Include any lingering student loan debt.
  • Other loans: Don’t forget personal loans, medical bills or any other outstanding debts.

Calculating Your Net Worth

With your assets and liabilities in hand, calculating your net worth is a breeze. Simply subtract your total liabilities from your total assets:

Total Assets – Total Liabilities = Net Worth

Interpreting the Results

Once you’ve crunched the numbers, you’ll fall into one of three categories:

Positive net worth: Congratulations! You have more assets than liabilities. This is a great place to be, and it means you’re building wealth.

Negative net worth: If your liabilities outweigh your assets, don’t fret. Many of us start here, especially with student loans or a mortgage. The key is to work on increasing your assets and reducing your debts over time.

Zero net worth: In this case, your assets and liabilities are equal. While it’s not negative, you should still aim to increase your assets to achieve positive net worth.

Why Tracking Net Worth Matters

Now that you’ve calculated your net worth, you might wonder, “Why is this important?” Well, here’s why:
Financial awareness: It gives you a clear view of your financial health. Are you on track to meet your goals, or do you need to make some adjustments?

Goal setting: Setting financial goals becomes more precise when you know your net worth. Whether it’s buying a house, retiring early or starting a business, your net worth guides your path.

Debt management: It helps you prioritize paying down high-interest debts to boost your net worth.

Investment decisions: Knowing your net worth can influence your investment choices and risk tolerance.

While it’s always important to have a clear idea of your net worth outside of just your bank account, it’s especially important to calculate your net worth after a major life event, like a health issue, unemployment or divorce. Confronting our finances can be scary when you feel overwhelmed, but it’s important to be able to make a strong game plan to move and thrive financially.



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