How to calculate your net worth
Pick a date, such as December 31 or the first day of a quarter, and use values from that day on both sides. Mixing a January brokerage statement with a June mortgage balance makes the result drift.
Next, list every asset at what it would fetch today, not what you paid. Accounts are easy because statements show a balance. A home, a car or a business stake needs an estimate, and a cautious one is more useful than a flattering one.
Then list every liability at its payoff amount: the Mortgage balance, auto and student loans, card balances, and any tax or medical bill you already owe. Subtract the second total from the first.
The result is a snapshot. One reading tells you little; the same calculation repeated each quarter or year, on the same basis, shows whether you are building wealth and how fast.
- Count: cash and deposits, taxable investments, retirement accounts, HSAs and 529 plans, real estate and vehicles at market value, business stakes and cash-value life insurance.
- Subtract: mortgages and home equity lines, car and student loans, card balances, personal and margin loans, and bills or taxes already due.
- Leave out: future pay, expected inheritances, and Social Security or pension payments you can’t sell; plan for those as income instead.
What raises net worth, and what doesn’t
Only a few things change net worth. Income you don’t spend raises it. Investment returns and changes in the value of your home and other property raise or lower it. Interest, fees, taxes and spending lower it.
Moving money between your own pockets does not. Paying $1,000 of mortgage principal cuts your cash by $1,000 and the loan by $1,000, so net worth is unchanged that day; only the interest part of the payment reduces it. The same holds for moving cash into a brokerage account or an IRA, and for a Roth conversion, apart from the conversion’s tax bill, which is a real cost. Amortization explains why early mortgage payments are mostly interest and later ones mostly principal.
That is why your savings rate and investment returns drive net worth over a lifetime. Early in a career, new saving is most of each year’s change. Later, once balances are large, one year’s market swing can move net worth more than a year of saving, in either direction.
Net worth vs. income
Income is a flow: money earned over a year. Net worth is a stock: what has piled up, measured on one day. The Federal Reserve draws the same line in its Survey of Consumer Finances and notes that the two measures don’t always move together, because net worth reflects many years of saving, borrowing and price changes.
A high salary doesn’t guarantee a high net worth. A household earning $300,000 that spends nearly all of it, finances its cars and carries a large mortgage can hold less wealth than a couple on modest pay who saved steadily for 25 years. That gap is the idea behind the HENRY label. What turns income into net worth is the share you keep and invest.
The two figures answer different questions. Income tells you what you can afford this year and drives your taxes. Net worth tells you how long you could last without a paycheck, how close you are to financial independence, and what might pass to your heirs.
Net worth benchmarks by age
The most detailed public figures come from the Federal Reserve’s Survey of Consumer Finances. Its 2022 survey, still the most recent the Fed has published, found median family net worth of $192,900 and a mean of $1,063,700, both in 2022 dollars. The mean sits far above the median because a small share of families holds a large share of wealth, so the median is the better yardstick for a typical household.
Median net worth rises through the working years, peaks for families headed by someone 65–74, then dips. Homeownership is the sharpest divide: the 2022 median was $396,200 for owners and $10,400 for renters and others, and much of that gap is home equity itself.
Use these figures loosely: they are several years old, stated in 2022 dollars, and mix families of every income and region. A more personal test is whether you are on the path your own plan needs, such as reaching your FI number by the age you hope to stop working. Rules of thumb built on a multiple of salary miss that, because they ignore how much you spend.
Common mistakes when tracking net worth
Net worth is simple arithmetic, so most errors come from the inputs, and nearly all of them make the figure look bigger or more spendable than it is. Consistency matters more than precision: value each item the same way every time, and even a slightly wrong number will show the right trend. When you want a figure closer to what you could actually spend, track liquid net worth or an after-tax figure alongside the headline number.
- Valuing a home at a hopeful asking price with no allowance for selling costs, or a car at what you paid for it.
- Treating every tax-deferred dollar as yours, when part of each traditional 401(k) or IRA dollar will go to income tax.
- Counting the mortgage twice, by listing home equity as the asset and then subtracting the loan again.
- Adding future salary, bonuses or Social Security as assets.
- Comparing yourself with the mean instead of the median.
- Forgetting debts that aren’t on a statement, such as tax due in April or a cosigned loan the borrower has stopped paying.
Illustrative numbers
A household balance sheet on December 31
- Total assets
- The current market value of everything you own: cash, investments, retirement accounts, real estate, vehicles, business stakes and other property
- Total liabilities
- The payoff value of everything you owe: mortgages, loans, card balances, and taxes or bills already due
Measure both sides on the same date; net worth is a snapshot, not a rate.
Cash, checking and savings$25,000
Taxable brokerage account + 401(k)s and IRAs$60,000 + $310,000 = $370,000
Home at estimated market value$450,000
Two cars at resale value$30,000
Total assets$25,000 + $370,000 + $450,000 + $30,000 = $875,000
Mortgage + car loan + credit card + student loan$280,000 + $18,000 + $4,000 + $23,000 = $325,000
Net worth$875,000 − $325,000 = $550,000
This household’s net worth is $550,000, but most of it is hard to spend: $310,000 sits in 401(k)s and IRAs that owe tax on withdrawal, and $170,000, about 31%, is home equity. Only $85,000 is in cash and a taxable account.
At a glance
U.S. family net worth by age of family head, 2022 Survey of Consumer Finances (2022 dollars)
| Age of family head | Median net worth | Mean net worth |
|---|---|---|
| Under 35 | $39,000 | $183,500 |
| 35–44 | $135,600 | $549,600 |
| 45–54 | $247,200 | $975,800 |
| 55–64 | $364,500 | $1,566,900 |
| 65–74 | $409,900 | $1,794,600 |
| 75 or older | $335,600 | $1,624,100 |
| All families | $192,900 | $1,063,700 |
Put it in your plan
Net worth in MoneyWhatIf
MoneyWhatIf’s household overview splits today’s figures into Assets, Owed and Net worth, and opening Net worth shows the subtraction. Saving your finances writes a dated snapshot to History, where net worth is always worked out from the stored figures. In a projection, each net-worth bar’s solid height is net worth, with what is still owed as a hatched cap, and the ledger beside it nets transfers such as contributions, Roth conversions and mortgage principal to zero. A life milestone can find the first projected year net worth reaches a target, and the taxable-net-worth view estimates what would remain if everything were sold or withdrawn in one year.
Common questions
Net worth FAQs
How can I increase my net worth?
Widen the gap between what you earn and what you spend, and invest the difference; that gap is the part you control most directly. Clearing high-interest debt helps too, because interest is a steady drain, while paying down principal only swaps cash for a smaller loan. Borrowing to buy things that lose value, such as a new car, works against you on both sides of the balance sheet. Over decades, returns on money already saved do more and more of the work.
Should I include my home in my net worth?
Yes. Standard net worth counts the home at market value and subtracts the mortgage, so the difference is what the home adds. Because you need somewhere to live and a home takes months to sell, many people also track net worth without their primary residence. The SEC’s accredited-investor test does exactly that: it looks for net worth over $1 million excluding the value of the primary home.
Do retirement accounts count toward net worth?
Yes, at their current balance. Keep in mind that a traditional 401(k) or IRA holds money that hasn’t been taxed yet, so part of the balance will go to income tax when withdrawn, while a Roth IRA balance is generally yours tax-free once withdrawals are qualified. Two households with the same headline net worth can end up with very different after-tax wealth.
What is the difference between net worth and liquid net worth?
Net worth counts everything you own, including a home, cars and retirement accounts, minus everything you owe. Liquid net worth keeps only what you could turn into cash within days at close to full value, such as bank deposits and taxable investments, minus the debts that money would repay. A household can have a large net worth and little liquid net worth when most of its wealth sits in home equity or pre-tax retirement accounts.
Can net worth be negative?
Yes. It is common early in adult life, when student loans or a car loan outweigh savings. In the Fed’s 2022 survey, families in the bottom quarter of the wealth distribution had a mean net worth of −$5,300. A negative number is a starting point, not a verdict: paying down high-interest debt while saving steadily turns it positive, and the direction matters more than the level.
How often should I calculate my net worth?
Quarterly or yearly is enough for most households; daily market moves add noise without changing decisions. Use the same date and valuation method each time, and note one-off events such as buying a home, so every jump or drop has an explanation. Reading it next to your cash flow shows whether gains come from saving or from markets.