How to Calculate Your Net Worth?

This Page Was Last Updated: December 19, 2022
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Household Assets

National Ranking
Check each slice for the different net worth brackets.

Household Liabilities

Total Net Worth
Liquid Assets vs Non-liquid Assets
[Enter Asset Values to Display Graph]

Net worth calculates all your assets (property, savings, stocks, etc.) minus any debts and other liabilities you may have, such as a mortgage loan. It's a snapshot of your financial situation at a given time.

Your net worth can be used to measure your overall financial health and track your progress over time. A higher net worth will help you qualify for more loans, such as a HELOC or home equity loan. It can also help predict your ability to withstand unexpected expenses or financial setbacks.

If you're looking to build wealth, it's essential to know where you stand financially and identify areas where you can improve. Tracking your net worth can help you do just that.

Net Worth Calculation

Net Worth = Assets - Liabilities

  • Net Worth: The portion of your assets that you own
  • Assets: The valuable items you own
  • Liabilities: Any debts you have

The standard approach is to add all your assets (property, savings, stocks, etc.) and subtract any debts or liabilities you owe. This figure represents the total value of everything you own compared to any outstanding financial obligations.


Assets can be defined as anything of resale value that you own. These items typically grow in value over time but can also include depreciating assets such as a car or boat. There are two categories of assets; liquid and non-liquid.

  • Liquid assets can easily be converted into cash, such as bank accounts or stocks. These assets tend to be preferred because they can be used to cover unexpected expenses or financial setbacks. In some cases, stocks will be non-liquid if they are held in an inaccessible account.
  • Non-liquid assets are not easily converted into cash, such as real estate or valuable artwork. While you can still sell these assets, it will take more effort and have larger selling fees.

Asset Allocation of Wealth Classes

Federal Reserve, Q2 2022


Liabilities are any debts or loans you owe, such as a mortgage, credit card balance, or student loan. These debts can significantly impact your overall financial situation and drag down your net worth if they exceed the value of your assets. As with assets, you can divide liabilities into two categories; current and long-term.

  • Current liabilities are debts that must be paid within a year, such as credit card debt or hard money loans. These debts typically have a higher interest rate, which can accumulate quickly if not properly managed. A common strategy with current liabilities is refinancing into lower-interest rate long-term liabilities.
  • Long-term liabilities are debts that must be paid over more than one year, such as a mortgage or student loans. These debts typically have a lower interest rate and are less urgent to pay off, so it's essential to plan accordingly.

Liability Allocation of Wealth Classes

Federal Reserve, Q2 2022

Net Worth

You can determine your net worth by understanding your assets and liabilities. This number represents the amount of equity you have in your assets. It is the net value of your assets after deducting the amount you owe. A higher net worth means you have more equity in your assets. As a result, you'll have an easier time receiving loans. This is because you have more asset collateral that another lender does not already secure.

You can also use your worth to evaluate your overall financial health and track your progress over time. A higher net worth is healthier because it represents owning more assets than debt. However, there are different ways to calculate net worth, which are further explained in a section below.

Net Worth Calculation Example

Imagine a home with a mortgage to buy it. The house is the asset and the mortgage liability. The difference between the home value and mortgage is your home equity. The same concept applies to all the assets and liabilities in your life. Your home equity is the difference between your home value and mortgage debt. Your net worth is the difference between the value of all your assets and debts.

To calculate your net worth, you'll need to begin with the total value of your assets and liabilities. For example, imagine you have the following assets and liabilities:

  • Primary residence: $500,000
  • Vacation home: $250,000
  • Savings account: $20,000
  • Car value: $15,000
  • Mortgage debt: $500,000
  • Car loan: $5,000
  • Credit card debt: $3,000
= $785,000= $508,000

To calculate your net worth, you would first subtract your liabilities from your assets, resulting in a total of $277,000. In this example, you would remove your mortgage debt ($500,000) car loan ($5,000), and credit card debt ($3,000), leaving a net worth of $277,000.

Net Worth Percentile

The top 10% control 62.8% of United States Assets. Meanwhile, the top 1% control 27.9% of assets. The following section provides information on how many assets you need to be in the top net worth percentiles in the United States.

Wealth PercentileAverage Net Worth
Bottom 25%-$14,000
25% to 49.9%$58,000
50% to 74.9%$236,000
75% to 89.9%$704,000
90% to 100%$5,710,000

Types of Net Worth

As we talked about the different categories of assets and liabilities, the same applies to net worth. These are frequently used to evaluate your net worth in different ways. This section will explain the importance of each method and how to calculate it.

Liquid Net Worth

Liquid net worth is the net value of your assets that can be easily converted into cash, such as stocks or I bonds. It represents the money you have available to pay off debt or invest in other assets. This is frequently used to indicate your overall financial health, as it evaluates how easily you can manage and control your cash flow.

To calculate your liquid net worth, subtract any debts or liabilities from your liquid assets. In many cases, this will be a negative number because most people store wealth in non-liquid assets. For example, suppose you have a $500,000 home, $20,000 in savings, and $100,000 in debt. Your liquid net worth would be -$80,000 because your home is a non-liquid asset. It will be included in your tangible net worth though.

Tangible Net Worth

Tangible net worth is another way of evaluating your net worth, and it measures the number of assets that are not easily converted into cash. You can compare this with a liquid net worth to see the percentage of your net worth in each category. This includes real estate, vehicles, or your 401(k) account.

To calculate your tangible net worth, subtract your debt from your non-liquid assets. Don’t include liquid assets such as a savings account. For example, suppose you have $250,000 in tangible assets, $20,000 in liquid assets, and $200,000 in debts. In this case, your tangible net worth is $50,000. This is because you don’t include liquid assets in the calculation.

Future Net Worth

Future net worth is a way to estimate your wealth in the future based on current trends. This can be used as an indicator of how well you are planning for the future or as a way to measure your progress toward financial goals. To calculate your future net worth, you'll need to estimate how much your assets will grow and how much your debt or liabilities will decrease over time. A common way to estimate asset value increases is using a future value calculator.

Business Net Worth / Shareholder Equity

Businesses also calculate their net worth to determine their financial health. The process is completed annually as part of the financial statement process. However, instead of net worth, businesses call it shareholder equity which is displayed on the balance sheet.

How to Increase Your Net Worth

There are many ways to increase your net worth, and evaluating different strategies based on your financial situation is essential. Some standard methods include saving more, investing wisely, paying off debt, and maximizing tax benefits.

One strategy for increasing your net worth is to develop a savings plan that allows you to set aside a portion of your income each month. This could involve creating a budget and tracking your expenses, automating transfers to a savings account, investing in low-cost index funds, or using visualization techniques to motivate yourself to save more. A common approach to budgeting is the 50/30/20 Rule.

Another strategy is to invest wisely by choosing investment vehicles that align with your risk tolerance and financial goals. This may include diversifying your portfolio across different asset classes and increasing exposure to growth stocks or real estate investing. Another popular active investing strategy is the BRRRR method.

To further increase your net worth, you can also look for ways to reduce debt or consolidate loans at a lower interest rate. For example, consider refinancing high-interest credit card debt with a personal loan at a lower interest rate, negotiating with creditors to reduce the amount you owe, or seeking help from a credit counseling agency. You can take advantage of a cash-out refinance if you have sufficient home equity.

Lastly, taking advantage of tax benefits that can help increase your net worth is essential. This might include contributing to retirement accounts such as an IRA or 401(k), considering a Roth conversion if you expect to be in a higher tax bracket, or taking advantage of income-driven repayment plans for student loans. Implementing one or more strategies can build wealth and improve your financial health.

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