Net Worth Calculator: Easily Track Your Assets and Liabilities
A net worth statement is simply a personal balance sheet. It shows where you stand financially. It provides a summary of your assets minus your liabilities. In other words, your personal net worth is calculated by listing all that you own, and then subtracting all that you owe to get a net number. The first step in calculating your net worth is to gather all the necessary financial documents, which includes your recent bank and loan statements. Once you have the required information, start the calculation by listing all of your assets with their values.
Calculating Net Worth: What are Assets and Liabilities?
If you’re not sure what assets and liabilities are, here are some guidelines:
Assets:
Cash: what you have on hand, what’s in your checking accounts and what’s in your savings accounts. Include any savings bonds and certificates of deposit.
Retirement Savings: the value of your 401(k), IRA or other defined-contribution plans. Pensions can be tricky to value.
Other Investments/Brokerage Accounts: Draw from your most recent statements for stocks, bonds, mutual funds and other negotiable instruments.
Liabilities
Any money you owe to another person or entity falls under this category. That includes revolving consumer debts — such as credit card balances — as well as personal, auto, payday and title loan balances. If you’re using your home as an asset, its mortgage counts as a liability as well.
| Assets – Liabilities = Net Worth |
| Assets | Liabilities |
| Checking Accounts | Consumer Debt |
| Saving Accounts | Personal Loans |
| Retirement Savings | Student Loans |
| Real Estate | Mortagages |
| Autos | Auto Loans |
| Other Debt |
Do You Include a 401(k) In A Net Worth Calculation?
All of your retirement accounts are included as assets in your net worth calculation. That includes 401(k)s, IRAs and taxable savings accounts.
Compare Your Net Worth
The Federal Reserve releases its Survey of Consumer Finances every three years — the most recent report was issued in September 2023 with data from a survey fielded in 2022. Here’s how median net worth stacks up by income, age, family size and education, and how it has changed since 2019.
3 Common Mistakes To Avoid When Using A Net Worth Calculator
Whenever you calculate net worth, it’s critically important to measure both assets and liabilities. A common mistake is to forget to net out the liabilities thus showing only assets. This inflates your financial picture. Net worth is correctly calculated by subtracting liabilities from your assets to show a complete, personal balance sheet.
Another common mistake that makes your net worth calculation inaccurate is not including all relevant data. One advantage to this calculator is it prompts you for the various items that should be included so that you don’t leave anything out. This increases accuracy and consistency. Finally, if your calculation shows a negative net worth try not to get too frustrated. You’re not alone.
FAQs
What is net worth?
Net worth is the difference between what you own (assets) and what you owe (liabilities). It gives you a snapshot of your financial health.
How do I calculate my net worth?
To calculate your net worth, list all your assets and their values (such as cash, investments, property, etc.). Then, list all your liabilities (such as credit card debt, loans, mortgages). Subtract liabilities from assets to get your net worth.
Should I include retirement accounts like 401(k) or IRA?
Yes, retirement accounts like 401(k)s, IRAs, and other retirement savings are considered assets and should be included in your net worth calculation.
Do I include my home as an asset?
Yes, if you own a home, you should include its market value as an asset. However, the mortgage on the home is a liability.
Conclusion
Calculating your net worth is an essential tool for understanding your financial situation. By accurately listing all your assets and liabilities, you can get a clear picture of where you stand financially. This information helps in making informed decisions about budgeting, saving, investing, and managing debt.
