How to Calculate Your Net Worth (And What It Should Be)

Net worth is the single most important number in your financial life. It tells you exactly where you stand financially — better than your income, your credit score, or your bank balance. Here's how to calculate it, what it should be, and how to grow it.

Net Worth Formula: The Simple Math

Net Worth = Total Assets − Total Liabilities. That's it. Add up everything you own (assets), subtract everything you owe (liabilities), and the result is your net worth. It can be positive or negative.

What Counts as an Asset?

• Checking and savings accounts
• Investment accounts (401k, IRA, brokerage)
• Home value (current market value, not purchase price)
• Vehicle value (current resale value)
• Other real estate
• Business ownership value
• Cash value of life insurance
• Valuable personal property (jewelry, art, collectibles)

What Counts as a Liability?

• Mortgage balance
• Car loans
• Student loans
• Credit card debt
• Personal loans
• Medical debt
• Any other money you owe

Average Net Worth by Age in the US (2024)

According to the Federal Reserve's Survey of Consumer Finances, here are the median (middle) net worth figures by age group. Note: median is more useful than average because a few billionaires skew the averages dramatically.

• Under 35: $39,000 median / $183,000 average
• 35-44: $135,000 median / $549,000 average
• 45-54: $247,000 median / $975,000 average
• 55-64: $365,000 median / $1,566,000 average
• 65-74: $410,000 median / $1,794,000 average
• 75+: $335,000 median / $1,624,000 average

The Rule of Thumb: What's a 'Good' Net Worth?

Thomas Stanley's research (The Millionaire Next Door) suggests this formula: Expected Net Worth = Age × Gross Annual Income ÷ 10. So a 40-year-old earning $80,000 should have a net worth of $320,000. This is a rough guideline, not a hard rule.

The 5 Fastest Ways to Increase Your Net Worth

1. 1Increase income — the biggest lever available to you
2. 2Reduce high-interest debt — every dollar paid off increases net worth $1
3. 3Maximize retirement contributions — tax-advantaged growth
4. 4Buy a home — forced savings through equity buildup
5. 5Cut lifestyle inflation — don't increase spending with income increases

Why Net Worth Matters More Than Income

A doctor earning $300,000 with $400,000 in student loans, a $600,000 mortgage, and $50,000 in credit card debt has a lower net worth than a teacher earning $50,000 who has paid off their home and maxed their 401(k) for 20 years. Income buys lifestyle. Net worth buys freedom.