How to Calculate Net Worth: Assets vs. Liabilities
Your net worth is the single clearest number in personal finance: the total value of everything you own minus everything you owe. Income tells you what flows in; net worth tells you what you've actually kept. This guide shows you how to calculate it correctly and avoid the mistakes that make the number misleading.
The net worth formula
The formula is simple: Net Worth = Total Assets − Total Liabilities. The work is in listing the right things on each side and valuing them honestly.
What counts as an asset
Assets are things you own that have monetary value. The common categories are:
- Cash and cash equivalents — checking, savings, money market accounts.
- Investments — brokerage accounts, retirement accounts (401(k), IRA), HSAs, and taxable holdings.
- Real estate — your home and any investment property, valued at a realistic market price.
- Vehicles and valuables — cars, and high-value items like jewelry or collectibles, at resale value.
- Business interests — the equity value of a business you own a stake in.
What counts as a liability
Liabilities are what you owe. List the current outstanding balance, not the original loan amount:
- Mortgages and home equity loans.
- Student loans.
- Auto loans.
- Credit card balances and other consumer debt.
Common mistakes that distort the number
Three errors trip people up most often: valuing assets at what you paid (or hope to get) rather than today's market value; forgetting smaller liabilities; and mixing up gross and net values, like counting a home's full value while ignoring the mortgage against it.
Calculate once, then track the trend
A single net worth figure is a snapshot. The real insight comes from watching it move over months and years. The cleanest way to do that is to record a dated snapshot of each balance on a regular cadence, then let the trend line tell the story.
WorthSync is built around exactly this idea — dated snapshots instead of fragile formulas. Start tracking your net worth free and watch the number compound.