The formula in one line
Net worth = total assets − total liabilities
Assets are things you own that have a money value today: cash, investments, retirement balances, property and anything else you could sell. Liabilities are amounts you still owe: a mortgage, car loan, student loan, card balances and money borrowed from family. The result can be positive, zero or negative. All three are normal at different stages of life.
The arithmetic is simple. The work is in deciding what to include and at what value, so that the total means the same thing each time you calculate it.
Five steps
- Pick one date. Use the same day for every balance, for example the last day of the month. Mixing a January bank balance with a June loan statement gives a number that never existed.
- List your assets at today’s value. Cash and savings at their balance, investments at market value, retirement accounts at their statement value, a home or car at a realistic sale price, not what you paid.
- List every debt at its outstanding balance. Use the principal you still owe, not the monthly payment. Include card balances even if you pay them in full each month.
- Subtract. Add the assets, add the debts, and take the second total from the first.
- Sense-check. Look for anything counted twice or missing, and write down the valuation rules you used so you can repeat them next time.
A worked example
Here is a household that owns a home with a mortgage, has some retirement savings and a car loan. Every figure is measured on the same date.
| Assets | Value | Liabilities | Balance |
|---|---|---|---|
| Home (estimated sale value) | 320,000 | Mortgage principal | 150,000 |
| Retirement accounts | 70,000 | Student loan | 14,000 |
| Taxable investments | 40,000 | Car loan | 12,000 |
| Cash and savings | 20,000 | Credit cards | 4,000 |
| Car (resale value) | 15,000 | ||
| Total assets | 465,000 | Total liabilities | 180,000 |
Net worth = 465,000 − 180,000 = 285,000. Of that, the home contributes 320,000 − 150,000 = 170,000 of equity. The rest comes from savings, investments and the car, less the other debts.
Which value to use for each item
| Item | Use | Avoid |
|---|---|---|
| Bank and savings accounts | Balance on the chosen date | An average over the month |
| Shares and funds | Market value on the chosen date | The price you paid |
| Retirement accounts | Statement value, noted as before tax | Mixing it into cash |
| Home and other property | A realistic sale estimate | Purchase price or an optimistic listing |
| Car and valuables | Resale value | Replacement cost |
| Loans and cards | Outstanding principal | Monthly payment or credit limit |
For a fuller list, including cash-value life insurance and business interests, see what counts in net worth.
The one double-counting rule
Enter the home at its full value and the mortgage as a separate debt, or enter only the equity, but never both. Entering 170,000 of equity and subtracting the 150,000 mortgage would understate this household by 150,000. The same rule applies to a car and its loan. Our guide to home equity in net worth explains the options and when people leave the home out on purpose.
A quick checklist before you trust the total
- Every balance is from the same date.
- Each asset uses today’s value, not its cost.
- Each debt is the amount still owed, not the payment.
- No asset appears both at full value and as equity.
- Joint accounts are counted once, and you know whether this is a household or individual figure.
- Retirement balances are noted as before-tax amounts.
What to do with the number
A single net worth figure is a snapshot. It becomes more useful when you repeat it with the same rules, for example every quarter, and look at what changed and why. If the result is negative, that is common early on, especially with student loans; see what negative net worth means. To keep a record over time, read how to track your net worth.
Questions people ask
Should I include my car?
Yes, at a realistic resale value, with any car loan listed separately as a debt. Cars usually lose value, so update the estimate each time.
Do I include money I am owed?
Include it if you reasonably expect to be repaid. If repayment is uncertain, leave it out or note it separately so it does not inflate the total.
Is net worth the same as income?
No. Income is money received over a period; net worth is a balance on a date. See net worth vs income.
Sources
- Federal Reserve Board, Survey of Consumer Finances net worth flowchart: which asset and debt categories the Fed counts.
- Federal Reserve Board, Changes in U.S. Family Finances from 2022 to 2025 (October 2026): “Net worth is the difference between families’ gross assets and their liabilities.”
Educational information only. The example is illustrative and is not personal financial advice.