To calculate your net worth, you’ll need to start by figuring out how much everything you own is worth (like your bank account, home, and retirement accounts), and how much money you owe to various creditors. 

Using a computer program or app, such as Quicken Simplifi, can help you stay on top of these numbers, which makes calculating your net worth a piece of cake. But if you’re not using an app, you can still add it all up yourself. This post will show you how.

Net worth formula

Net worth = assets – debts

At the most basic level, your net worth is just the total value of all your assets minus your liabilities.

Your assets include money or things that are worth money, such as investments, crypto, retirement accounts, real estate, or cars. 

Your liabilities include anything that you owe, such as credit card debt, bank loans, mortgages, and unpaid bills.

Don’t forget these items

Some debts are easy to overlook, so be sure you’re including everything: student loans, store cards, credit cards, your mortgage, and so on.

“I’ve found that sometimes people overlook student loans if they took out a whole bunch of different loans or if it’s been quite a while since they took them out,” says Katie Brewer, certified financial planner with Your Richest Life. “The National Student Loan Data System can be a great tool to find information on most of your student loans.” 

In addition, don’t overlook your mortgage. For example, if your home is worth $230,000 and you have a $210,000 mortgage, you have to count both of those — together, they increase your net worth by $20,000.

Compare net worth changes over time

Your net worth at any given time is just a snapshot of how you’re doing at the moment. For many people, their net worth starts out negative and improves over time. What’s most important is how your net worth is moving — and why. 

“I encourage people to look at their net worth trend over a longer time period like a year rather than a short period like a month,” says Brewer. “If investments are part of your net worth, you want to make sure that you know how much of your net worth increase or decrease was due to the markets and how much of it was due to debt payoff for savings. Don’t be discouraged if your net worth has decreased over the last year because the market is in a down period. If you are saving for retirement and have 10 years or more until retirement, you should be invested in a good amount of stock investment, where sometimes the market will go up and sometimes the market will go down.”

Other financial measures

Net worth isn’t the only measure you need to be aware of when you’re checking your finances. “Make sure that you don’t get so carried away in monitoring your net worth that you invest all of your money,” cautions Brewer. “You should still have money in cash reserves so that if an emergency happens, you have that money quickly available.” 

For example, if you stash all your money in a retirement plan that you can’t access for many years yet, you might have a large net worth, but you might not be in great shape in an emergency. Consider keeping some of that money in a simple savings account where you can access it when you need it — so you won’t have to max out those high-interest credit cards.

At the end of the day, growing your net worth is about having a solid financial plan you can stick to — one that helps you pay down your debt, grow your savings, and retire with the money you need.