How this works
Net worth is the single cleanest measure of where you actually stand financially: everything you own minus everything you owe. Income gets you a snapshot of one month; net worth tracks long-term wealth, which is what you actually retire on. Track it once a quarter and the trend tells you more than any individual paycheck does. Assets fall into four practical buckets. Liquid (cash, checking, money-market accounts — money you could spend tomorrow), invested (brokerage accounts, stocks, ETFs, bonds — money working for you with some volatility), retirement (401k, IRA, Roth, pension — money locked up but growing tax-advantaged), and physical (home equity at market value, vehicles, valuable collectibles). Liabilities are anything you owe with a contractual obligation: mortgage balance, student loans, auto loans, credit-card balances, personal loans, and any business or tax debt. Note that mortgage balance — not home value — is the liability; the home itself is an asset on the other side of the equation. Three practical points. (1) Use current market value, not purchase price. A car you bought for $30k three years ago might be worth $18k now; a home you bought for $450k might be worth $580k. The net-worth number reflects today's reality. (2) Be honest about retirement vs. liquid. Many people see a 6-figure 401k and feel rich, then forget they can't touch it without penalty for 25 years. Track liquid net worth (excluding locked-up retirement) as a separate line if early flexibility matters. (3) The number itself matters less than the trajectory. Going from −$5k to +$2k year-over-year is a much better signal than the absolute zero crossing.
The formula
Use current market value for everything (today's home value, today's portfolio balance, today's outstanding loan balances). The five default asset rows cover ~95% of household balance sheets in OECD countries; the four liability rows do likewise. If you have business equity or significant other holdings (private investments, valuable collectibles, crypto), lump them into "Vehicles & other".
Example calculation
- Assets: $5,000 cash + $80,000 invested + $120,000 retirement + $580,000 home + $25,000 vehicles = $810,000.
- Liabilities: $380,000 mortgage + $18,000 auto loan + $4,000 credit card = $402,000.
- Net worth = $810,000 − $402,000 = $408,000.
Frequently asked questions
Should I include my house at purchase price or current market value?
Current market value, conservatively estimated. Use a recent appraisal if you have one, otherwise use Zillow's Zestimate, Redfin Estimate, or your country's equivalent (Rightmove, Idealista, ImmoScout, Suumo) and shave 5–10% off as a sanity buffer for transaction costs. The mortgage balance — not the original loan amount — goes on the liability side. Doing it this way means your net worth changes whenever your home appreciates or depreciates, which is the point.
How often should I track this?
Quarterly is the sweet spot. Monthly is overkill — household balance sheets don't change that fast and you'll obsess over short-term portfolio fluctuations. Annually is too sparse to catch problems early (you can drift for two years before noticing). Quarterly captures the trend without the noise. Pick the same date each quarter (e.g. last day of March/June/September/December), spend 15 minutes updating numbers, save the result. After 4–6 quarters the trajectory becomes obvious and the actionable insight lives there, not in the absolute number.
What's a 'good' net worth for my age?
Highly country-dependent and benchmarks lie about as much as they help. The widely-cited US Federal Reserve Survey of Consumer Finances 2022 medians: under-35 around $39k, 35-44 around $135k, 45-54 around $247k, 55-64 around $364k, 65-74 around $410k. UK ONS Wealth and Assets Survey 2018-2020 medians are roughly £350k for households aged 55-64. German DIW SOEP 2017 data put median household net wealth at €70k. These numbers are heavily skewed by housing — Germany's lower median reflects renting culture, not poorer households. A more useful self-benchmark: are you ahead of where you were last year? That's the metric that compounds.
How do I handle joint accounts and shared assets with a spouse?
Two valid approaches; pick one and stick with it. (1) Track household net worth: include 100% of joint assets and joint liabilities, plus each spouse's individual holdings. The number reflects your combined balance sheet. This is what most personal-finance writers recommend because financial decisions for couples are usually joint. (2) Track individual net worth: include 50% of joint accounts and assets, 50% of joint debts. The number reflects your personal stake. Useful if finances are kept separate, you want to track individual progress, or there's a non-zero chance the relationship ends. There's no right answer — just don't switch back and forth, because the trend will look weird.