How to Calculate Your Net Worth (And Why It Matters)
Net worth is the ultimate financial health metric. Learn how to calculate yours, what\'s considered healthy at every age, and how to grow it systematically.
How to Calculate Your Net Worth (And Why It Matters)
Income tells you how much money flows in. Net worth tells you how much you've kept. It's the single most comprehensive measure of your financial health — and most people have never calculated it.
Here's how to do it, what it means, and how to grow it.
What Is Net Worth?
Net worth is simple:
Net Worth = Total Assets − Total Liabilities
- Assets: Everything you own that has value
- Liabilities: Everything you owe
A positive net worth means you own more than you owe. A negative net worth means you owe more than you own (common for recent graduates with student loans).
How to Calculate Your Net Worth
Step 1: List Your Assets
Liquid assets (cash and cash equivalents):
- Checking account balances
- Savings account balances
- Money market accounts
- CDs
Investment assets:
- Brokerage account balances
- 401(k) and IRA balances
- Pension value (if applicable)
- Stock options (vested)
- Cryptocurrency
Physical assets:
- Home value (current market value, not purchase price)
- Car value (use Kelley Blue Book)
- Jewelry, art, collectibles (realistic resale value)
- Business ownership value
Total all assets.
Step 2: List Your Liabilities
- Mortgage balance
- Car loan balance
- Student loan balance
- Credit card balances
- Personal loan balances
- Medical debt
- Any other money you owe
Total all liabilities.
Step 3: Calculate
Net Worth = Total Assets − Total Liabilities
Example:
| Assets | Value |
|---|---|
| Checking/savings | $15,000 |
| 401(k) | $85,000 |
| Brokerage account | $30,000 |
| Home value | $350,000 |
| Car value | $18,000 |
| Total Assets | $498,000 |
| Liabilities | Balance |
|---|---|
| Mortgage | $280,000 |
| Car loan | $12,000 |
| Student loans | $25,000 |
| Credit cards | $3,000 |
| Total Liabilities | $320,000 |
Net Worth = $498,000 − $320,000 = $178,000
Average Net Worth by Age (2026)
These are median figures — meaning half of Americans have more, half have less:
| Age Group | Median Net Worth | Mean Net Worth |
|---|---|---|
| Under 35 | $39,000 | $183,000 |
| 35–44 | $135,000 | $549,000 |
| 45–54 | $247,000 | $975,000 |
| 55–64 | $364,000 | $1,566,000 |
| 65–74 | $410,000 | $1,794,000 |
| 75+ | $335,000 | $1,624,000 |
Note: Mean is much higher than median due to extreme wealth at the top. Median is more representative of typical Americans.
What's a "Good" Net Worth?
Rather than comparing to averages, use these benchmarks:
Fidelity's retirement savings benchmarks:
- Age 30: 1× your annual salary saved
- Age 40: 3× your annual salary
- Age 50: 6× your annual salary
- Age 60: 8× your annual salary
- Age 67: 10× your annual salary
The 4% rule target: Multiply your desired annual retirement income by 25. That's your net worth target for retirement.
Why Net Worth Matters More Than Income
Two people can earn the same income and have vastly different net worths. A doctor earning $300,000 with $500,000 in student debt, a $1.2M mortgage, and no savings may have a lower net worth than a teacher earning $60,000 who has been consistently saving and investing for 20 years.
Net worth measures wealth accumulation — not just income. It's the scoreboard that actually matters.
How to Grow Your Net Worth
Increase Assets
- Invest consistently — even small amounts compound significantly over time
- Maximize retirement accounts — tax advantages accelerate growth
- Build home equity — pay extra on your mortgage principal
- Develop income-producing skills — higher income = more to invest
Reduce Liabilities
- Pay off high-interest debt aggressively — credit cards first
- Avoid lifestyle inflation — don't increase spending as income rises
- Refinance high-rate loans — lower rates = faster payoff
- Avoid unnecessary debt — every dollar borrowed is a liability
The Wealth Formula
Net Worth Growth = (Income − Expenses) + Investment Returns − Debt Costs
The levers you control:
- Increase income
- Decrease expenses
- Improve investment returns (lower fees, better allocation)
- Reduce debt costs (pay off or refinance)
Track Your Net Worth Regularly
Calculate your net worth at least quarterly. Watching it grow (even slowly) is one of the most motivating things in personal finance.
Free tools:
- Personal Capital (now Empower) — automatically syncs accounts
- Mint — free budgeting and net worth tracking
- Simple spreadsheet — manual but effective
The Bottom Line
Your net worth is your financial report card. Calculate it today, set a growth target, and track it quarterly. The simple act of measuring it will motivate you to make better financial decisions.
Find the best financial tools to grow your net worth at DollarSound's Investing hub.
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