The Net Worth Formula
Net Worth = Total Assets − Total Liabilities
That's it. The complexity is in gathering accurate numbers, not in the calculation. A positive net worth means you own more than you owe. A negative net worth — common for young adults with student loans or early homeowners — means liabilities exceed assets. Neither is permanent. What matters is the direction: is it growing year over year?
What Counts as an Asset?
Assets are things of financial value that you own:
- Liquid assets: Checking accounts, savings accounts, money market accounts, cash on hand
- Investment accounts: Brokerage accounts (stocks, ETFs, bonds, mutual funds)
- Retirement accounts: 401(k), IRA, Roth IRA, pension value (current value, not what you'd receive at retirement)
- Real estate: Current market value of your home and any investment properties
- Vehicles: Current market value (Kelley Blue Book or similar)
- Business interests: Your ownership stake in any business, valued conservatively
- Other: HSA balance, 529 college savings accounts, valuable collectibles (only if there's a genuine market)
Note: include real estate at current market value, not purchase price. Use actual current values for investments — what they're worth today, not what you paid or hope they'll be worth.
What Counts as a Liability?
Liabilities are debts you owe:
- Mortgage balance (remaining principal, not the original loan amount)
- Home equity loans or HELOCs outstanding balance
- Student loan balances
- Car loan balance
- Personal loan balances
- Credit card balances (use your current balance, not limit)
- Medical debt
- Any other money you owe
Use current balances, not original amounts. Log into each account and get today's payoff balance.
How to Calculate Yours in 20 Minutes
Open a spreadsheet with two columns: Assets and Liabilities. Spend 20 minutes gathering the current balance of every account, loan, and asset you can think of. Log into your bank, brokerage, and loan servicer websites and record current balances. Look up your home's estimated current value on Zillow or Redfin. Check your car's value on Kelley Blue Book.
Add up each column. Subtract total liabilities from total assets. That number is your current net worth.
Set a calendar reminder to repeat this exercise every January 1st. The annual snapshot shows you the trend — which is what actually matters. One bad year, one good bonus, one market crash — none of these define your trajectory. The 5-year or 10-year trend does.
Net Worth Benchmarks by Age
| Age Group | US Median Net Worth | US Average Net Worth | Fidelity Benchmark |
|---|---|---|---|
| Under 35 | ~$39,000 | ~$183,000 | 1× annual salary saved |
| 35–44 | ~$135,000 | ~$549,000 | 3× annual salary |
| 45–54 | ~$247,000 | ~$975,000 | 6× annual salary |
| 55–64 | ~$365,000 | ~$1.57M | 8× annual salary |
| 65–74 | ~$410,000 | ~$1.79M | 10× annual salary |
US median and average from Federal Reserve Survey of Consumer Finances (2022). Fidelity benchmarks focus on retirement savings specifically — net worth includes non-retirement assets too. The average is skewed upward by very high-net-worth individuals — median is more representative for most people.
A common financial planning benchmark (from Fidelity): your net worth should equal roughly your annual salary by age 30, doubling every decade. But these are aspirational guidelines — many people start later, earn less, or face circumstances that make these targets unrealistic for their timeline. What matters is consistent growth relative to your starting point.
How to Grow Your Net Worth
Net worth grows when assets increase, liabilities decrease, or both simultaneously. The key levers:
- Save consistently. Every dollar saved is a dollar added to assets. Even $200/month saved for 30 years at 7% growth becomes $227,000.
- Invest the savings. Money in a savings account grows slowly. Money in a diversified index fund historically grows at 7–10% annually after inflation. The gap between saving and investing determines how fast net worth grows.
- Pay down debt. Every dollar of debt paid off increases net worth by a dollar. Paying down a 20% credit card is a guaranteed 20% return.
- Avoid lifestyle inflation. When income rises, keep expenses relatively flat and direct the difference to assets. This is where most wealth-building happens.
- Protect existing assets. Adequate insurance prevents a single event from erasing years of accumulated net worth.
Net Worth Globally — UK, India, and Canada
UK: Median household wealth in the UK is approximately £302,500 (2022 ONS data), with home equity being the dominant component for most households. The UK's high property values mean many homeowners have substantial net worth tied up in illiquid real estate. Pension wealth (workplace and state pension entitlements) is also counted in comprehensive UK net worth calculations. The ONS Wealth and Assets Survey provides detailed breakdowns. For practical purposes, UK residents calculate net worth the same way as outlined above, substituting pound figures.
India: India has significant wealth inequality, making average figures misleading. For most middle-class Indian households, net worth is concentrated in real estate (often one property), gold (still a significant store of wealth culturally), provident fund balances (EPF), insurance policies with savings components (LIC endowments), and fixed deposits. Investable financial assets (mutual funds, equities) are growing but still represent a smaller share of wealth for most households compared to Western counterparts. Calculating net worth in India follows the same assets minus liabilities formula — include the current market value of property, gold, EPF, mutual funds, and bank balances as assets; home loan, car loan, and other debts as liabilities.
Canada: Median Canadian family net worth was approximately $489,300 (2019 Survey of Financial Security, Statistics Canada — more recent data pending). Like the UK, Canadian net worth is heavily concentrated in real estate in major cities. RRSP, TFSA, and pension balances are significant assets for working Canadians. The TFSA is particularly valuable for net worth tracking — it grows tax-free with no tax consequence upon withdrawal, making it genuinely worth its stated value. FCAC tools at canada.ca.