Your net worth is the single most important number in personal finance. It is the total value of everything you own minus everything you owe. Unlike income, which measures cash flow, net worth measures your accumulated wealth — the true scoreboard of financial progress.
Tracking net worth reveals whether you are actually building wealth or just earning and spending. Someone earning $200,000 per year with $300,000 in debt and $50,000 in savings has a lower net worth than someone earning $60,000 with a paid-off home and $100,000 in retirement accounts.
How to Calculate Your Net Worth
The formula is simple: Assets − Liabilities = Net Worth. List every asset and every debt to get an accurate picture.
- Assets include: Cash and bank balances, retirement accounts (401k, IRA), investment and brokerage accounts, home market value, vehicle value, real estate, business equity, and other valuable property.
- Liabilities include: Mortgage balance, student loans, auto loans, credit card debt, personal loans, medical debt, and any other money owed.
Average Net Worth by Age in 2026
The Federal Reserve Survey of Consumer Finances provides benchmarks. Note that median is more representative than average, as a few ultra-wealthy individuals skew the average upward dramatically:
- Under 35: Median net worth ~$39,000 | Average ~$183,000
- 35–44: Median ~$135,000 | Average ~$549,000
- 45–54: Median ~$247,000 | Average ~$975,000
- 55–64: Median ~$364,000 | Average ~$1,566,000
- 65–74: Median ~$409,000 | Average ~$1,794,000
- 75+: Median ~$335,000 | Average ~$1,624,000
The Two Levers: Grow Assets, Reduce Liabilities
Every net worth increase comes from one of two actions: growing your assets or reducing your liabilities. The fastest growth comes from doing both simultaneously.
- Grow assets: Maximize retirement contributions ($23,500 in 401k for 2026), invest consistently in low-cost index funds, build home equity through mortgage payments, and grow your income through career advancement or side businesses.
- Reduce liabilities: Aggressively pay down high-interest debt (credit cards first), make extra mortgage payments when feasible, avoid new consumer debt, and refinance high-rate loans when possible.
Common Net Worth Mistakes
Avoid these pitfalls that distort your financial picture:
- Overvaluing your home: Use conservative estimates based on recent comparable sales, not Zillow's optimistic estimates. Your home value minus your mortgage is your true home equity.
- Counting depreciating assets at purchase price: Your car is not worth what you paid for it. A 3-year-old vehicle has typically lost 40–50% of its original value.
- Ignoring retirement accounts: Your 401(k) and IRA are real assets. Include them, but note that pre-tax accounts will be taxed upon withdrawal.
- Forgetting hidden liabilities: Include all debts — medical bills, buy-now-pay-later balances, personal loans from family, and tax obligations.
How Often Should You Track Net Worth?
Check your net worth monthly or quarterly. Monthly tracking catches problems early and keeps you motivated. Quarterly is sufficient for people in a stable financial routine. Avoid checking daily — short-term market fluctuations will create unnecessary anxiety.
Our Net Worth Calculator makes it easy to input all your assets and liabilities, visualize the breakdown, and track changes over time. The key is consistency — use the same method each time so your comparisons are meaningful.
Try the Net Worth Calculator
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Frequently Asked Questions
Is it normal to have a negative net worth?
Yes, especially in your 20s and early 30s. Student loans, car loans, and early-career salaries often mean liabilities exceed assets. This is temporary if you are managing debt responsibly and building savings. Focus on the trend — your net worth should be increasing over time, even if it starts negative.
Should I include my home in my net worth calculation?
Yes, but use your home equity (market value minus remaining mortgage), not the full home value. Your home is an illiquid asset — you cannot easily spend it — so some financial planners recommend tracking net worth both with and without home equity for a complete picture.
How can I increase my net worth quickly?
The fastest wins are paying off high-interest debt (every dollar of debt eliminated increases net worth by a dollar) and increasing retirement contributions to capture any employer match (an instant 50–100% return). Beyond that, focus on growing your income, keeping lifestyle inflation in check, and investing consistently. There are no sustainable shortcuts.
What net worth do I need to retire?
Using the 4% rule, you need approximately 25 times your desired annual retirement spending. If you plan to spend $60,000 per year in retirement, your target net worth (in investable assets, not counting your primary home) is about $1.5 million. Social Security benefits can reduce this target. Use our Retirement Calculator for a personalized estimate.