What Is Net Worth and Why You Should Track It Monthly

Your salary is what you earn. Your net worth is what you keep. It's the single most important number in personal finance — and most people have no idea what theirs is. Net worth is simple: everything you own minus everything you owe.

The Net Worth Formula

Net Worth = Total Assets − Total Liabilities. Assets include: cash and savings, investment accounts (401k, IRA, brokerage), real estate equity, vehicles (at market value), and any other valuables. Liabilities include: mortgage balance, car loans, student loans, credit card debt, and any other money you owe.

Why Net Worth Is More Useful Than Income

A doctor earning $300,000/year with $600,000 in student loans and a BMW payment has a low net worth. A teacher earning $55,000/year who has been saving and investing for 20 years may have a net worth of $400,000. Income is a flow. Net worth is the reservoir — and the reservoir is what funds your retirement, your security, and your freedom.

Average Net Worth by Age (US, 2024)

• Under 35: median ~$39,000
• Ages 35–44: median ~$135,600
• Ages 45–54: median ~$247,200
• Ages 55–64: median ~$364,500
• Ages 65–74: median ~$409,900

Don't use these as benchmarks for anxiety — use them as context. A more useful benchmark: is your net worth higher than it was 12 months ago? That's the only question that matters.

How to Grow Net Worth Faster

1. 1Invest consistently — index funds compound over time
2. 2Pay down high-interest debt — every dollar eliminated = net worth up $1
3. 3Avoid depreciating assets — a $35,000 car is worth $17,000 in 5 years
4. 4Increase income — higher income invested early has the biggest impact
5. 5Track monthly — what gets measured gets managed