One of the best ways for you to track your financial progress is to track your net worth. Your net worth is a basic measurement reflecting your monetary value. It offers a great overview of where you are at financially, and a quick look at your financial health. The number itself may not be particularly meaningful, but it does offer a yardstick against which you can measure yourself financially. You won’t get much out of comparing your net worth to someone else, but you can get a good idea of your own financial improvement by comparing your current net worth to your past net worth.

Why Calculate Your Net Worth

It is a good idea to figure your net worth every so often in order to motivate yourself to keep working toward improvements. Plus, going over all of your accounts, just to connect with them, can be a good reminder of what you have, and what you can work on. Figuring your net worth forces you to look at all of your accounts, and can help you keep track of where everything is. You don’t have to go in depth, but you can get a good refresher on exactly what you have (and what you need to pay down).

How to Calculate Your Net Worth

Figuring your net worth is one of the simplest calculations there is. The first step is to tote up your assets. These are things of value. Some of the items that fall under assets include:

  • Savings accounts
  • Checking accounts
  • Investment accounts (including retirement account values)
  • Cash products (CDs, etc.)
  • Market value of your home
  • Market value of other real estate that you own
  • Market value of your car(s)
  • Valuable works of art and/or jewelry

Once you add up all of these amounts, you are likely to have a reasonably large number. Write this down. Only include the value of assets you have right now. You don’t include future income, or yearly income. Your net worth is a snapshot of what your financial situation looks like in this moment. Try to figure your net worth on the same day of each month, or each quarter, to get a closer comparison.

Next, it’s time to figure out your liabilities. These are obligations that cost you. Some examples of liabilities include:

  • Credit card debt (total the balances remaining on each card)
  • Student loans
  • Car loans
  • Other vehicle loans
  • Mortgage balance
  • Personal loans
  • Loans for medical bills
  • Negative investment accounts

Once you have added up your liabilities, it is time to subtract them from your assets. If you have $300,000 in assets and $250,000 in liabilities (that mortgage balance can really drag down your net worth), your net worth is $50,000. Of course, it is possible to have negative net worth. If your liabilities total $330,000 and your assets $300,000, then you have a net worth of -$30,000.

My own net worth is slightly negative because I haven’t been in my home very long, and I’ve got student loans and a car loan to pay off. But my net worth moves toward the positive a little more each quarter, and once the student loans are paid down, and I’ve paid the mortgage down and built equity, there should be some solid progress to the positive net worth territory. And, of course, a stock market recovery will help immensely, too, since it will boost the value of my investment accounts.

The important thing is that a net worth calculation can help keep you moving in the right direction. Make it a goal to increase your net worth, and then track your progress. You might find it satisfying to watch as your individual monetary value increases.



Miranda is freelance journalist. She specializes in topics related to money, especially personal finance, small business, and investing. You can read more of my writing at Planting Money Seeds.