What Is Net Worth?
Net worth is the most complete snapshot of your financial health — it's the total value of everything you own minus everything you owe. Unlike income, which measures what flows in each month, net worth measures what you've actually built and kept. Consistently growing your net worth is the core objective of personal financial management.
Net Worth Formula
Assets: cash, investments, retirement accounts, real estate value, vehicles · Liabilities: mortgage balance, loans, credit card debt
US Net Worth Benchmarks (2023 Federal Reserve Data)
- Under 35: Average $183,500 · Median $39,040
- Ages 35–44: Average $549,020 · Median $135,300
- Ages 45–54: Average $975,800 · Median $247,200
- Ages 55–64: Average $1,566,900 · Median $364,500
- Ages 65–74: Average $1,794,600 · Median $409,900
Note: Averages are skewed by wealthy households. Medians better reflect typical Americans. Focus on your personal trend, not comparisons.
Benefits of Using a Net Worth Calculator
- Single snapshot of financial health: Net worth combines everything — savings, investments, debts — into one number that tells you where you stand right now.
- Track progress over time: Recalculate quarterly or annually to see whether your wealth is growing. An increasing net worth trend matters more than the absolute number.
- Assets vs. liabilities clarity: The breakdown chart separates what you own from what you owe, making it easy to spot which liabilities to pay down first.
- Benchmark against Federal Reserve data: Compare your number to median net worth by age group from the Fed's Survey of Consumer Finances to get perspective without guilt.
Frequently Asked Questions
What is net worth?
Net worth = total assets minus total liabilities. Positive net worth means you own more than you owe. Negative is common early in life (student loans, new mortgage). What matters most is the trend — is it growing year over year?
What should I include as assets?
All financial accounts (checking, savings, investments, 401k, IRA), real estate at current market value, vehicles at current market value, and valuable physical assets. Don't include everyday items — furniture, clothing, electronics — unless they have significant resale value.
What should I include as liabilities?
All outstanding debt balances: mortgage balance, auto loans, student loans, credit card balances, personal loans, medical debt. Use current balances, not original amounts. A car worth $20K with a $15K loan = $20K asset, $15K liability, $5K equity.
What is a good net worth?
A rough target: Age × Annual Income ÷ 10 (Thomas Stanley formula). Age 40 earning $80K = target $320K. This is a guideline, not a rule. Consistent growth matters more than hitting any specific number.
Should I include my home in net worth?
Yes — current market value as an asset, remaining mortgage balance as a liability. The difference is your home equity. Note that home equity is illiquid. Many planners track "investable net worth" separately (total net worth minus home equity) to understand liquid wealth available for retirement.
How often should I calculate my net worth?
Quarterly is ideal — frequent enough to spot trends, not so often that market swings derail your mindset. Track in a spreadsheet with dates to see year-over-year progress. Consistent growth is the goal.
What does a negative net worth mean?
You owe more than you own — very common for young adults with student loans or recent homebuyers. Not a failure; it's a starting point. The critical question is direction: is it improving each quarter? Prioritize high-interest debt (credit cards) first, then low-interest debt can be managed more slowly while investing.
What's the fastest way to increase net worth?
Three levers: increase income, reduce expenses, invest the difference. Increasing income has the highest ceiling. Cutting housing and transportation costs (the two largest expenses) frees the most cash. Consistently investing in low-cost index funds builds wealth through compounding. All three together are exponentially more powerful than any one alone.