How to Calculate Net Worth (With a Worked Example)

Net worth is total assets minus total liabilities: add up everything you own, subtract everything you owe, and the difference is the number. The arithmetic takes two minutes. What takes longer is deciding what counts as an asset, what your house is really worth, and which of the four follow-up ratios actually tell you something. This walks through all of it with a full worked example.

What is the net worth formula?

Net worth equals total assets minus total liabilities. Assets are everything you own that could be sold for cash; liabilities are every balance you still owe.

The Federal Reserve uses the same definition in its Survey of Consumer Finances, stating plainly that “net worth is the difference between families’ assets and liabilities.” That survey, published in October 2023 and covering data through 2022, put real median family net worth at $192,900.

Here are the formulas the free net worth calculator actually runs, written out. Grouping assets into three buckets before subtracting is what makes the follow-up ratios possible:

Total cash        = checking + savings + cash on hand
Total investments = brokerage + retirement + other investments
Total property    = home value + other real estate + vehicles + other assets

TOTAL ASSETS      = total cash + total investments + total property
TOTAL LIABILITIES = credit cards + auto loans + student loans + mortgage + other debt

NET WORTH         = TOTAL ASSETS - TOTAL LIABILITIES

What does a completed net worth calculation look like?

A worked example makes the structure obvious. Below are the seed figures shipped in the Net Worth Tracker workbook, carried straight through the formulas above.

Line	Figure
Total cash	$16,200
Total investments	$83,000
Total property	$268,500
TOTAL ASSETS	$367,700
TOTAL LIABILITIES	$236,700
Non-mortgage debt (part of the above)	$38,700
NET WORTH	$131,000
Liquid net worth	-$1,500
Home equity	$47,000
Debt-to-assets	0.64
Reserve months	3.77
Share of net worth in property	35.9%

Check the spine of it: $16,200 + $83,000 + $268,500 = $367,700 in assets. Subtract $236,700 of liabilities and net worth is $131,000. Every other line in that table is a ratio built on those same three numbers.

Why is liquid net worth negative when net worth is $131,000?

Because liquid net worth deliberately ignores retirement accounts and the house, then subtracts every non-mortgage debt. It measures reachable money, not total wealth.

This is the single most useful line in the whole calculation and almost no net worth calculator reports it. Here is the exact formula:

LIQUID NET WORTH = total cash + brokerage + other investments
                   - (credit cards + auto loans + student loans + other debt)

Notice what is missing on purpose. Retirement is excluded, because a 401(k) is not money you can reach this month without penalty. The house is excluded. The mortgage is excluded too, so the house is not punished for a debt whose asset was removed. What remains is the money that could actually absorb a surprise, minus the debt already claiming it.

In the worked example that produces -$1,500 against a net worth of $131,000. The reason is the $38,700 of non-mortgage debt: it is large enough to swallow the cash and taxable investments entirely. Both numbers are true at once. One says this household owns more than it owes; the other says almost none of that is reachable. A single net worth figure hides that completely.

Does a 401(k) count as net worth?

Yes. A 401(k) is an asset you own, so its current balance belongs in total investments and therefore in net worth. It is excluded only from liquid net worth.

Use the current balance as the statement shows it, not a projected future value. The same rule covers IRAs, pensions with a stated cash balance, and an HSA. Vested employer contributions count; unvested ones are not yours yet.

How should you value your house?

Use what it would realistically sell for this month. Not the purchase price, and not the most flattering online estimate. When unsure, the low end keeps the number honest.

The house enters the calculation twice and the two entries do different jobs. The full market value goes into total property; the mortgage balance goes into total liabilities. Home equity is just the gap between them:

HOME EQUITY = home value - mortgage balance

In the example that gap is $47,000. Overstating the house inflates equity and net worth together, which is exactly the error an optimistic online estimate introduces.

What do the debt and reserve ratios tell you?

They convert the balance sheet into two proportions: how much of what you own is financed, and how many months your cash alone would cover.

DEBT-TO-ASSETS  = total liabilities / total assets
RESERVE MONTHS  = total cash / monthly expenses
SHARE IN PROPERTY = (home value + other real estate - mortgage) / net worth

The worked figures: $236,700 / $367,700 gives a debt-to-assets ratio of 0.64, meaning 64 cents of every dollar of assets is financed. Reserve months comes to 3.77. Share of net worth in property is 35.9% — $47,000 of the $131,000 sits in the house, which is the same equity figure from earlier viewed as a proportion.

These three lines are why the three-bucket split at the top matters. A flat list of assets and debts can produce net worth, but it cannot produce any of these.

How often should you recalculate it?

Monthly, on the same day, using statement balances. One reading is a snapshot; the direction of travel across several readings is the part that carries information.

The workbook’s dashboard shows what a year of readings looks like: 12 months tracked, $108,000 at the first reading, $131,000 at the latest — a change of $23,000, or 21.3%, at an average of $2,090.91 per month.

That average is worth a second look, because it is a place where spreadsheets commonly go wrong. $23,000 divided by 12 months would be $1,916.67. The dashboard reports $2,090.91, because 12 monthly readings contain only 11 intervals of change, and $23,000 / 11 = $2,090.91. Dividing by the count of readings instead of the gaps between them understates progress every time.

Where can you run this without building it?

The formulas above are live in a free calculator, and the same arithmetic ships as a spreadsheet if you want the month-over-month history.

• The free net worth calculator runs every formula on this page in the browser. Nothing is saved or sent anywhere.
• The Net Worth Tracker workbook adds the 12-month dashboard — the history, the percent change and the per-interval average — in Google Sheets or Excel.

Common questions

Should I include my car?

Yes, on both sides. The vehicle’s resale value goes into total property and the auto loan balance goes into total liabilities. Because a car’s resale value falls faster than most loans amortise, this pair is a frequent reason net worth moves down in a month where nothing else changed.

Do I subtract the mortgage from the house or list it separately?

List them separately — full market value in total property, full balance in total liabilities. Netting them early hides the mortgage from the debt-to-assets ratio and from total liabilities, so two of the four ratios stop working. Home equity is calculated for you from the two separate entries.

Why is my net worth negative?

Because liabilities currently exceed assets, which is arithmetic rather than a verdict. It is a common reading for anyone early in repaying student loans or a new vehicle. The tracked direction across several months is the part that describes what is actually happening.