How to calculate your net worth

Calculating your net worth is pretty straight forward. You need to add up your assets and then subtract your liabilities which will show your personal net worth. Knowing that is important in order to understand your financial health and progress toward your goals for the future.

Ideally, your net worth will increase with age until you retire when you will want to have enough in your nest egg to be able to maintain your lifestyle. The amount of net worth that you should have varies for each individual but according to the Federal Reserve the average American had a net worth of $121,700 in 2019, that latest data that is available.

How to calculate your net worth

As mentioned you need to add up all of your assets (i.e. what you own) first. This includes the money you have tucked away in you checking and savings accounts, any stocks and bonds in your investment portfolio, retirement savings accounts, property you own such as your car and house, as well as any other assets that you can sell for cash should you need to.

Then you need to add up all of your liabilities. This includes any loans like for your car, student loan debt, mortgage and credit card debt as well as other financial obligations such as bills, medical and utilities, along with taxes you owe.

Finally, subtract your liabilities from your assets and you have an idea of your net worth. To get an idea of how your net worth compares to the rest of the nation, you can check out USA Facts breakdown of the Fed’s data in easy to view graphs.

There are several apps available that can help you tally up your assets and liabilities, or you can use an excel sheet to keep track of your net worth from year to year. The Federal Deposit Insurance Corporation provides a handing online calculator to give you an idea of all the financial details that you should keep in mind when calculating your net worth.