Question 1

What is net worth?

Accepted Answer

Net worth is the total value of everything you own (assets) minus everything you owe (liabilities). It is the most comprehensive single measure of your financial health and is calculated as: Net Worth = Total Assets − Total Liabilities.

Question 2

What counts as an asset?

Accepted Answer

Assets include cash, bank accounts, investment accounts, retirement accounts (401k, IRA, RRSP), real estate equity, vehicles, business ownership, jewelry, collectibles, and any other property you could convert to cash. Use current market value, not purchase price.

Question 3

What counts as a liability?

Accepted Answer

Liabilities are debts you owe: mortgage balance, car loan, student loans, credit card balances, personal loans, medical debt, tax liens, and any other obligation. Use the current outstanding balance, not the original loan amount.

Question 4

What is a good net worth?

Accepted Answer

A rule of thumb from The Millionaire Next Door: your target net worth is roughly (age × pre-tax income) / 10. However, net worth varies enormously by age, income, and location. More useful is tracking your own net worth over time and ensuring it is growing.

Question 5

Should I include my home in net worth?

Accepted Answer

Yes, but use equity (market value minus mortgage balance) rather than the gross value. Your home is an asset, but it is illiquid and has carrying costs. Some financial planners track net worth with and without primary residence to get a clearer picture of liquid wealth.

Question 6

How often should I calculate my net worth?

Accepted Answer

Quarterly or annually is typical. More frequent tracking can be noisy due to market fluctuations. The goal is to observe a long-term upward trend — net worth growing through a combination of debt paydown, savings, and investment returns.

Question 7

What does a negative net worth mean?

Accepted Answer

Negative net worth means you owe more than you own. This is common for recent graduates with student debt or new homebuyers with small down payments. It is not necessarily a problem if your income is growing and you are managing debt responsibly, but the goal should be to move net worth positive over time.

Net Worth Calculator

Assets

Liabilities

Asset & liability breakdown

Common questions