Personal Finance5 min read

How to Calculate Your Net Worth (And Why It's the Only Number That Matters)

Your income doesn't make you wealthy — your net worth does. Here's exactly how to calculate it and what to do next.

A doctor earning $300,000/year with $400,000 in student debt and a $600,000 mortgage might have a lower net worth than a teacher earning $60,000 who's been maxing out their 401(k) for 20 years. Income is a flow. Net worth is the scoreboard. Here's how to calculate yours — and what it actually means.

The Formula

Net Worth = Total Assets − Total Liabilities. That's it. Add up everything you own, subtract everything you owe. The result — positive or negative — is your net worth.

Your Assets: Everything You Own

Cash and savings accounts
Checking and money market accounts
Investment accounts (brokerage, stocks, ETFs)
Retirement accounts (401k, IRA, Roth IRA)
Home value (current market value, not purchase price)
Vehicles (current market value, not what you paid)
Other property (rental real estate, land)
Business ownership value
Other valuable assets (jewelry, collectibles)

Your Liabilities: Everything You Owe

Mortgage balance (remaining principal)
Car loan balance
Student loan balance
Credit card balances
Personal loans
Medical debt
Any other money owed

💡 Use current market value for assets, not purchase price. Your house might be worth $350,000 today even if you paid $280,000. Use Zillow or Redfin for estimates. For cars, use Kelley Blue Book.

What's a Good Net Worth?

The median US household net worth is about $192,000 (2022 Federal Reserve data). The average is $1.06 million — skewed heavily by the ultra-wealthy. Use the median as a realistic benchmark.

Age 25: median ~$10,000 (most people just starting)
Age 35: median ~$76,000
Age 45: median ~$168,000
Age 55: median ~$212,000
Age 65: median ~$266,000

The Simple Wealth Target by Age

A common rule: your net worth should equal your age × your annual income ÷ 10. If you're 40 and earn $80,000: target = 40 × $80,000 ÷ 10 = $320,000. This is a rough guide — not gospel.