What Is Net Worth and How to Calculate It
Reviewed for accuracy by the Clearcoin team
Net worth is the single best snapshot of your financial health — better than your salary. It's simply what you own minus what you owe. Here's how to work it out and why it's worth tracking.
Key takeaways
- Net worth = assets − liabilities.
- Add up everything you own at its current value, then add up every debt.
- A high salary doesn't mean wealth if it all goes out again.
- Two levers: increase assets (save and invest more) and decrease liabilities (pay down debt).
The simple formula
Net worth = assets − liabilities. Assets are things of value you own (cash, savings, investments, home, car). Liabilities are what you owe (mortgage, car loan, student loans, credit card balances). Subtract one from the other and you have your number.
How to calculate yours
Add up everything you own at its current value, then add up every debt. The difference is your net worth. It can be negative — common early on, especially with student loans — and that's just a starting point, not a failure.
Why it beats income
A high salary doesn't mean wealth if it all goes out again. Net worth captures what you actually keep. Two people earning the same can have wildly different net worths depending on how much they save and owe.
How to grow it
Two levers: increase assets (save and invest more) and decrease liabilities (pay down debt). Every dollar you save or every dollar of debt you clear moves your net worth up. Tracking it every few months turns progress into something you can see.
Official resources
Primary sources so you can check the details yourself:
Frequently asked questions
What is net worth?
What you own minus what you owe — your assets (cash, investments, property) minus your liabilities (loans and debts). It's a snapshot of your financial health.
Can net worth be negative?
Yes, and it's common early on — for example with student loans and little savings. It's a starting point to build from, not a sign of failure.
Why does net worth matter more than income?
Income is what you earn; net worth is what you keep. A big salary doesn't build wealth if it's all spent — net worth shows what actually stays with you.