How to calculate your net worth, with a simple example

Net worth is calculated by adding up everything you own, called your assets, then subtracting everything you owe, called your liabilities. The formula is assets minus liabilities equals net worth. It takes most people about fifteen minutes the first time and a lot less on every update after that, once you know which numbers to gather.

The formula in full

Assets minus liabilities equals net worth. That is the entire formula. The complexity, such as it is, comes from correctly identifying everything that belongs on each side and putting a fair current value on it, not from the arithmetic itself. Get the two lists right and the subtraction takes seconds.

Step 1: list every asset you own

• Cash and savings: checking accounts, savings accounts, and any cash you hold.
• Investments: brokerage accounts, retirement accounts, and any shares or funds you hold directly.
• Property: the current market value of your home or any other real estate, not what you originally paid.
• Crypto: the current value of any cryptocurrency you hold, priced at today’s rate rather than your purchase price.
• Precious metals: gold, silver or other metals, valued at the current spot price for the weight you hold.
• Vehicles and other valuables: a car’s current resale value, or other significant items you would actually sell if needed.

Use current value, not what you paid, for everything on this list. A home bought years ago and a crypto position bought last month should both be entered at what they are worth today.

Step 2: list every liability you owe

• Mortgage balance: what you still owe on your home, not the original loan amount.
• Loans: car loans, student loans, and personal loans.
• Credit card balances: any amount not paid off at the end of the month.
• Anything else you owe: money borrowed from family counts too, if you intend to repay it.

A worked example

Imagine someone with 15,000 dollars in savings, a home currently worth 320,000 dollars, 40,000 dollars in a retirement account, and 8,000 dollars in crypto and precious metals combined. Their total assets add up to 383,000 dollars. Against that, they still owe 210,000 dollars on their mortgage, 12,000 dollars on a car loan, and 3,000 dollars on a credit card, for total liabilities of 225,000 dollars. Subtracting liabilities from assets, 383,000 minus 225,000, gives a net worth of 158,000 dollars. That single number is the clearest one-line summary of their financial position, even though it says nothing about their monthly income or spending habits.

Common mistakes when calculating net worth

The most frequent error is using purchase price instead of current value, which overstates a depreciating car and understates an appreciated home or investment. The second is forgetting a liability entirely, particularly a smaller loan or a credit card balance that does not come to mind immediately. The third is double counting, such as including a car’s full value while also treating an outstanding car loan as separate from the asset it financed, when really the loan should simply be subtracted from the car’s current worth as part of the same calculation. Keeping a consistent, complete list on both sides avoids all three.

Doing this calculation on an ongoing basis

A single net worth calculation is a snapshot. The real value comes from repeating it regularly, since the trend over months tells you far more than any one number. The tedious part of repeating it by hand is re-pricing the assets that move on their own, like crypto, metals, or investments, every single time. Net Worth Tracker removes that step: you enter each asset once, the app prices the market-linked ones at live rates automatically, and your total updates itself. You add liabilities the same way, and the running total plus a chart of your progress is there whenever you open the app, all calculated on your own device with no bank connection required.

Frequently asked questions

What is the formula for net worth?

Net worth equals total assets minus total liabilities. Add up everything you own at current value, subtract everything you owe, and the result is your net worth.

Should I use current value or purchase price for my assets?

Always use current value. A net worth calculation is a snapshot of today, so a home, a car, crypto or metals should all be entered at what they would sell for now, not what you originally paid.