Net worth guide
How to calculate net worth, step by step.
Build a dated list of what you own and what you owe, use current values, and subtract total liabilities from total assets.
Short answer
Add the current value of all assets, add the current balance of all liabilities, then calculate assets minus liabilities. A positive or negative result is a snapshot—not a judgment—and becomes more useful when updated consistently over time.
1. Start with the formula
Net worth = total assets − total liabilities. Investor.gov describes the same process as listing what you own, listing what you owe, and subtracting liabilities from assets.
Choose one calculation date and one currency. Values from different dates or unconverted currencies can make the result misleading.
2. List assets at a reasonable current value
Include assets that have a meaningful current value and belong in the financial picture you are measuring. Use current account balances and reasonable market-value estimates rather than automatically using purchase price.
For jointly owned property, document whether the worksheet includes the whole value and whole related debt or only your share. Consistency matters more than choosing a complicated convention.
- Cash, checking, savings, and similar accounts
- Brokerage, retirement, and other investment accounts
- Real estate and land
- Vehicles, businesses, collectibles, and other valuable property
3. List current liability balances
Record the balance currently owed for each debt. Common examples include mortgages, credit cards, student loans, vehicle loans, personal loans, and taxes owed.
Do not subtract the original amount borrowed if part of it has already been repaid. Avoid adding all future interest payments to the present balance unless your chosen method specifically calls for that.
4. Add each side and subtract
If assets total $505,000 and liabilities total $265,000, net worth is $240,000. If the order were reversed, the result would be negative $240,000.
Keep total assets, total liabilities, net worth, the calculation date, and any important valuation notes together. That makes the next update easier to compare.
5. Avoid common double counting
Do not count the same investment both inside an account total and again as a separate holding. Do not subtract a mortgage twice—once from a home's value and again as a liability—unless the asset row intentionally represents home equity rather than the full home value.
Use either full asset value plus full related debt, or a documented equity value, but do not mix the two methods in one worksheet.
6. Update with a consistent routine
A monthly, quarterly, or annual schedule can work. Choose a frequency that matches how actively the values change and how much maintenance you can sustain.
Update after major events such as buying or selling property, taking on or paying off a large debt, or making a substantial investment change. Do not change old snapshots after the fact unless you are correcting an error and preserving that note.
Sources
This content is educational information, not individualized financial, investment, tax, or legal advice.