How to Calculate Your Net Worth – How Much Are You Worth?

Wondering just how much you are actually worth? You aren’t alone – people put a lot of time and effort into figuring out their “net worth”. In basic terms, net worth is determined by adding up everything you own and subtracting the things you don’t own outright, giving you your total financial worth. I am not big on the idea of using net worth as a deciding factor in many decisions because I believe that quality of life is an important part of the equation that isn’t counted, but for this post we will ignore anything other than the numbers themselves. An upward trending net value is seen as a positive thing and a downward trending net worth is seen as a negative, but please don’t get too down on yourself if you feel as though you aren’t living up to the expectations of others. At minimum, this is just a good thing to do once in a while to at least get a general idea of where you are financially. Let’s take a look at what goes in to figuring out your net worth.

The first thing you need to do is to add up all the things you own/balances in your various accounts. Because some people have a ton of different accounts, you have to be sure to not forget any of them — you need those assets counted in your net worth statement! Since everyone is different, here are the most common types of fixed and liquid assets that people do have:

  • Savings accounts
  • Checking accounts
  • Mutual funds
  • Money market accounts
  • Retirement accounts
  • Certificates of Deposit
  • Other investment accounts
  • Stocks and bonds
  • Valuables such as jewelry, antiques, art, collectibles, musical instruments
  • Current value of a home
  • Value of expensive items inside the home
  • Current value of any rental properties
  • Value of any cars owned

After adding up all those figures, it’s time to do the potentially disappointing part – subtracting the total value of the things you don’t actually own/still owe money on/carry debt for. It’s always best to overestimate rather than underestimate these figures, as I would rather think I didn’t have as much than think I was ahead of the game. Some common liabilities for most people include:

  • Mortgage balances on any property
  • Outstanding balances on credit cards
  • Student loan bills
  • Automobile loans
  • Any and all other debt/balances due on any borrowed money

Once you subtract that liabilities total from your assets, you are left with your net worth number. Don’t want to take the time to do the math? Lucky for you CNN/Money has a handy-dandy calculator you can use to do all the calculations for you. What kind of figure are you left with? Positive or negative? The thing to keep in mind is that when we hear about someone having millions of dollars, we all immediately think of them as well off. But if they also have $6 million in liabilities, be it debt, mortgages or cars, they would actually have a negative net worth; i.e. broke. If that’s the case for your local “millionaire”, all you have to do is have a $5.00 net worth and you are worth more than he or she is.

Now there’s something to chew on as you do the math.

(photo credit: borman818)

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Comments (3)

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  1. Last time I checked, my net worth was in the negatives thanks to my debt. I’m hoping to get it in the positives, even if it’s $1, by the end of this year.

  2. fairy dust says:

    I never actually did this before except sort of mentally, but now that I’m using Mint.com, it’s all there for me – I really like that overall picture it provides.

  3. David says:

    Great article! I love adding up my assets. But hate subtracting my liabilities.