📒 Net Worth, Explained: What It Is and How to Calculate Yours
Net worth is everything you own minus everything you owe. It’s the single best snapshot of your financial position, because it captures both sides of the ledger: the savings and assets you’ve built, and the debts that pull against them. Income tells you what flows in; net worth tells you what you’ve kept.
The formula
Net worth = total assets − total liabilities.
- Assets are things with money value: cash and savings, retirement accounts (401(k), IRA, pension), other investments, the market value of your home, and to a lesser degree a car or other valuables.
- Liabilities are debts: your mortgage balance, student loans, car loans, credit card balances, medical debt, and personal loans.
How to calculate yours in 15 minutes
- List your accounts. Log in to each bank, retirement, and investment account and write down today’s balance.
- Estimate your home’s value conservatively — what it would actually sell for, minus a little for selling costs.
- Add vehicles at resale value, not what you paid. Skip furniture and electronics; they’re hard to sell for much.
- List every debt balance — the amount you still owe, not the monthly payment.
- Subtract. Or let the Net Worth Check add it up for you and compare it with your age and income.
A negative net worth is normal early on
If you owe more than you own, you’re not alone. Student loans often push people into negative territory in their twenties. What matters is direction: a net worth moving from −$30,000 to −$10,000 over two years is a strong financial trajectory.
Typical net worth by age
The Federal Reserve’s 2022 Survey of Consumer Finances reported these U.S. median net worths by age of household head (rounded):
| Age | Median net worth |
|---|---|
| Under 35 | $39,000 |
| 35–44 | $135,600 |
| 45–54 | $247,200 |
| 55–64 | $364,500 |
| 65–74 | $410,000 |
| 75+ | $335,000 |
The median is the middle household — half have more, half have less. Averages are much higher because a small number of very wealthy households pull them up, so medians are the more honest comparison.
A rule of thumb: expected net worth
In The Millionaire Next Door, Thomas Stanley and William Danko suggest a simple yardstick: expected net worth = age × yearly pre-tax income ÷ 10. Someone 40 years old earning $90,000 would “expect” about $360,000. Double that or more marks a strong accumulator; under half suggests income isn’t turning into wealth yet. It’s rough — it’s tough on young and high-earning people — but it’s a useful gut-check.
How to grow it
- Raise your savings rate. It’s the biggest lever you control. See Savings Rate Explained.
- Pay down high-interest debt. Eliminating a 24% credit card balance is a guaranteed 24% return.
- Invest consistently. Regular contributions to diversified, low-cost funds let compounding do the heavy lifting over time.
- Avoid lifestyle creep. When income rises, save part of every raise before you get used to spending it.
How often to check
Every three to six months is plenty. Markets swing day to day, and checking too often tends to create anxiety rather than insight. Track the trend, not the noise.
Check your net worth against your age and income →