Net worth calculator: Learn how to calculate your net worth

The phrase “net worth” is often associated with business tycoons, actors and professional athletes. Type in a celebrity’s name and “net worth” is almost always among the suggested Internet searches. But learning how to calculate net worth isn’t only for the rich and famous.

We should all know and care about our net worth, experts say. Grant Sabatier, creator of a personal finance website,” claims it’s “the most important number in personal finance.”

Here, Sabatier backs up his bold claim with help from Bola Sokunbi, founder and CEO of a financial resources platform.

Sabatier and Sokunbi explain the fundamentals of this concept, from what net worth is to what it includes. And if you’re wondering: How do you calculate net worth? You’re in the right place. You’ll be able to crunch the numbers for yourself with our calculator below.

Net worth calculator: Let’s crunch the numbers

What is net worth?

“Your net worth is your personal finance scorecard,” Sabatier says. “It’s the only way to measure how much money you’d have if you sold everything you have that has value (assets) and paid off the money you owe (liabilities).”

These two factors form the basis of a net worth calculation. Assets include your savings, investments like stocks and bonds, valuables and property. Liabilities include loans and debt. Of course these things are important to track, but why put them all together in one figure?

Why is net worth important?

“Knowing your net worth is the foundation for overall financial planning,” Sokunbi says. “If you don’t know your net worth, it’s like getting in a car without knowing where you are or where you’re going.”

For example, if you’re estimating retirement expenses and determine you’ll need about $1 million to retire comfortably, calculating your net worth helps you better understand where you are in relation to that goal, and if you’re making enough progress to get there.

Your net worth may also impact your creditworthiness when applying for a loan, Sokunbi says. One more reason to know how to calculate your net worth? It’s a clear way to track debt reduction and savings growth through a single figure, making it easier to see your overall financial progress.

Without learning how to calculate net worth, you are “flying blind,” Sabatier says, making it that much harder to reach your financial goals.

So how do you calculate net worth? It’s not as difficult as you may think.

What does net worth include?

Using the net worth calculator above, you can plug in your assets and liabilities and let the tool do the math for you.

For a shortcut in tallying your liabilities, Sokunbi recommends pulling your credit report (you can get one free report each year from each of the three credit bureaus). You’ll find all your debts listed there alongside current amounts owed.

Tallying all your assets may take a little more time, but once you do it the first time, you’ll have a sense of where to find them all going forward. To help you along, use the net worth calculator as a guide directing you toward the documents you have to dig up.

When you first figure out how to calculate your net worth, the results may not be what you’re hoping for. In fact, experts like Sabatier and Sokunbi think this is a big reason people avoid calculating net worth—they know they have a lot of debt and little assets.

“When I started my financial journey, my net worth was negative $22,000,” Sabatier says. When you start building your net worth, particularly if you’re young or if you’ve just started focusing on money management, a low or negative number is okay, he stresses.

In fact, the median net worth among Americans younger than 35 is $14,000, according to a 2019 large-scale report by the Federal Reserve Board. That median figure grows to $91,110 for those age 35 to 44, then to $168,800 for those age 45 to 54.

Over time, most people’s net worth grows, but there are strategies for proactively increasing your net worth.

How can you increase your net worth?

You can now answer the question: How do you calculate net worth? It’s time for another: How do you grow it?

Growing your net worth requires increasing your assets while decreasing your liabilities. As you focus on how to increase your net worth, here are five steps recommended by the pros:

1. Boost your income

First, see if you can make more money so you can save more money. Whether that comes from career growth or by starting a side hustle (or both), the key is to actively seek income growth, Sokunbi says.

Even if you decide from the net worth calculator that you want to increase your assets, don’t feel you have to drastically improve your salary overnight. “Focusing on slow and steady income growth is also a good approach,” Sokunbi says.

2. Defeat your debt

As you’ve learned, debt is an important factor when using a net worth calculator. To help manage your existing debt, pay off higher-interest debt first to save yourself more money, Sokunbi says.

If your credit has improved or income has grown, you can also consider negotiating for better interest rates, she adds. With a lower interest rate you may be able to pay down your debt even faster, thereby increasing your net worth, Sokunbi says.

Going forward, be strategic about what new debt you take on.

3. Find ways to save more

See if you can save more money by cutting back on areas where you spend the most—primarily housing, transportation and food, Sabatier says. Saving on those big areas while allowing yourself to splurge on the little things helps you avoid feeling deprived while your net worth grows, he adds.

You’ll also want to avoid lifestyle inflation as your income grows or you pay off debt. Instead, Sabatier recommends funneling that money into a high-yield savings account where it can grow.

4. Automate your savings

As you review and optimize your budget, automate as much of your savings as possible. Then, set up reminders on your calendar to regularly check on the automated amount, interest rates and your account value, Sokunbi says.

As you amass savings, you may want to shift that money into investments or other longer-term savings vehicles that yield higher returns, she adds.

5. Dip your toes into the market

Lastly, look for “low barrier to entry” investment vehicles that don’t require advanced investing knowledge or a lot of regular attention, Sokunbi says. For example, ensure you have a 401(k) or IRA and are making regular contributions.

Beyond that, push your knowledge of investing, reading and learning more, so you feel confident making and tracking investments on your own, Sokunbi says. “That knowledge is so powerful. Don’t be intimidated by all the noise—you don’t have to trade on Wall Street to have successful investments.”

By trying out these strategies, you can boost your overall financial fitness and increase your net worth at the same time.

How can understanding your net worth help you?

Knowing how to calculate net worth and then tracking your net worth may seem intimidating or even unnecessary at first, but it’s a number that’s worth knowing.

Because net worth encompasses everything your money touches, from debt to savings to physical assets like homes and cars, it’s one of the few ways you can get a truly complete picture of your financial health. Tracking your net worth also allows you to see how changes in your financial habits help move the figure higher.

“The more time you spend with your money, the more comfortable you’ll get with it,” Sabatier says. “Money is something you need to have a relationship with and like most relationships, the more time you spend working on it the more fun it becomes.”

Knowing how to calculate your net worth is a key skill for anyone who wants to keep an eye on their financial health. If you want to ensure your goals are on track, then your next step is to conduct your own personal financial review every quarter.

Articles may contain information from third parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third party or information.