---
title: "What Is Net Worth? How to Calculate and Track Yours"
description: "Net worth is the clearest single snapshot of your financial health — what you own minus what you owe. Here's how to calculate it, why it beats your paycheck as a gauge, and how a typical US household compares."
category: "Personal Finance"
category_url: https://boursel.com/category/personal-finance
author: "Hannah Blackwood"
published: 2026-06-27T00:30:00.000Z
updated: 2026-06-27T00:30:00.000Z
canonical: https://boursel.com/article/what-is-net-worth-how-to-calculate-and-track-yours
tags: ["net-worth", "personal-finance", "assets", "liabilities", "wealth"]
---
# What Is Net Worth? How to Calculate and Track Yours

Net worth is the clearest single snapshot of your financial health — what you own minus what you owe. Here's how to calculate it, why it beats your paycheck as a gauge, and how a typical US household compares.

*This is general information, not financial advice.*

It's the one number that captures your whole financial life in a single figure — and most people have never actually calculated it.

## The formula

Net worth is simple arithmetic: **what you own minus what you owe.**

> **Net worth = total assets − total liabilities**

Positive, negative or zero, that number tells you whether you're building wealth or being held back by debt. Everything else in personal finance eventually flows through it.

## Assets and liabilities

**Assets** (what you own, at current market value): cash and bank accounts; investments (brokerage, 401(k), IRA, pensions); your home and any real estate; vehicles; and other valuables you could realistically sell. Use honest, current values — not what you paid or hope to get.

**Liabilities** (what you owe, at current payoff balance): mortgage, student loans, auto loans, credit-card balances, medical debt, personal loans.

## A worked example

| Assets | Value |
|---|---|
| Home (market value) | $400,000 |
| 401(k) and IRA | $150,000 |
| Cash and savings | $20,000 |
| **Total** | **$570,000** |

| Liabilities | Balance |
|---|---|
| Mortgage | $250,000 |
| Student loans | $30,000 |
| Credit-card balance | $10,000 |
| **Total** | **$290,000** |

**Net worth = $570,000 − $290,000 = $280,000** — what the household actually owns, free and clear.

## Net worth vs. income — not the same

Income is what you **earn**; net worth is what you've **accumulated**. A doctor earning $400,000 with huge student loans, a big mortgage and free-spending habits can have a near-zero or negative net worth, while a teacher who maxed a retirement account for decades and paid off a modest home can top $600,000. Income is a *flow* (it arrives and, if spent, disappears); net worth is a *stock* (the accumulated result of saving, investing and paying down debt). It's the better gauge of financial health because it reflects behavior over years, not one year's pay.

## How the typical US household compares

The Federal Reserve's [Survey of Consumer Finances](https://www.federalreserve.gov/publications/files/scf23.pdf), published every three years, is the authoritative source. Its 2022 edition found:
- **Median** US household net worth: about **$192,900**
- **Mean (average):** about **$1,063,700**

That ~$870,000 gap reflects how concentrated wealth is — a small number of very rich households pull the average far above what a typical family holds, which is why the **median** is the more useful benchmark (half of households have more, half less). Net worth also rises sharply with age: roughly **$39,000** median for households under 35 versus about **$364,500** for those aged 55–64. For most families, **home equity is the largest single asset** — meaning much of their net worth is illiquid.

## Positive, negative, liquid, illiquid

**Negative** net worth (owing more than you own) is common early on — a grad with $50k in loans and $5k saved is at −$45k. That's a starting point, not a crisis; the **trend** matters. Separately, not all net worth is reachable: **liquid** assets (cash, taxable brokerage) convert to cash fast, while **illiquid** ones (home equity needs a sale or new loan; retirement accounts carry penalties before 59½) don't. Knowing your *liquid* net worth — stripping out home and retirement — tells you your real emergency flexibility.

## How to track it — and common mistakes

Calculate it the same way once or twice a year: list assets at market value, list debts at payoff balance, subtract. A spreadsheet works; so do account-linking apps. Don't obsess over month-to-month market swings — the long-run trend is what counts (see our index-fund and compound-interest explainers). Common errors: **overvaluing** the home (use a realistic comparable) or the car (it depreciates fast), **forgetting debts**, and counting expected income as an asset.

## Why it matters

Net worth is the scoreboard for your financial life. Paying down a high-interest card raises it; contributing to a 401(k) raises it; financing less raises it faster. Track it annually and it answers one blunt question honestly: **am I getting ahead?**

## Sources

- [Changes in U.S. Family Finances from 2019 to 2022 (Survey of Consumer Finances)](https://www.federalreserve.gov/publications/files/scf23.pdf)
- [Calculate your net worth](https://www.investor.gov/financial-tools-calculators/calculators/calculate-your-net-worth)