The whole formula
That is genuinely all of it. What makes net worth powerful is not the arithmetic but what it refuses to be fooled by. A large salary spent entirely produces a net worth of zero. A modest salary saved consistently produces a real one. Income is a rate; net worth is the score.
A negative number is normal at some stages — a recent graduate with student debt and no assets is exactly where they should be. What matters is the direction of travel, which is why the point of this calculator is to run it again in a year.
What counts as an asset
- Cash and savings — current accounts, savings, your emergency fund.
- Investments — brokerage accounts, funds, shares, bonds, crypto if you hold it.
- Retirement accounts — 401(k), IRA, workplace pensions, anything locked away for later. Include it: it is yours, even if you cannot reach it yet.
- Property — the current market value of your home, not what you paid for it and not what is left on the mortgage. The mortgage goes on the other side.
- Vehicles — resale value, not purchase price. Be honest; a three-year-old car is worth considerably less than it feels.
Leave out anything you would not actually sell or could not price: furniture, clothes, the value of your degree. Padding the assets column only fools you.
Liquid net worth, and why it is different
Net worth includes your house and your locked-up retirement money. Neither pays a bill next Tuesday. Liquid net worth — cash and investments minus short-term debt — is the number that describes your actual flexibility.
People who are, on paper, comfortably positive can still be one boiler away from a credit card, because everything they own is in one illiquid asset. If your liquid figure looks thin, an emergency fund is the fix, and it comes before almost anything else.
Value your home conservatively. Use a realistic sale price, not the highest comparable on your street, and remember that selling costs money — agent fees, legal fees and taxes commonly take several percent. If home equity is most of your net worth, the number is more fragile than it looks.
How to make it go up
There are only two levers, and both work: increase assets or decrease debts. A unit of currency has identical effect either way, but not identical returns. Paying off a card at 22% is a guaranteed 22% improvement; investing might average 7%. When the debt is expensive, clearing debt wins outright.
The other thing that moves it, quietly and enormously, is time. The projection above assumes your holdings grow and you keep adding — the second half of that sentence is worth more in the first decade than the first half. See the compound interest calculator for why.
Track it once or twice a year, not monthly. It moves slowly by design, and checking too often turns a long-term measure into a source of anxiety.