Your Net Worth on One Page
- •Net worth = what you own (assets) − what you owe (debts)
- •Net worth, not monthly income, shows your real financial state
- •Calculating it once a year reveals the trend—up or down
What is net worth?
Net worth is what you own minus what you owe. Add up cash, investments, and property, then subtract debts like loans and card balances. That number is your real wealth right now—big income with big debt can still mean small net worth.
How to add it up
| Type | Examples |
|---|---|
| Assets (+) | Cash, investments, home, car |
| Debts (−) | Loans, card balances, installments |
| Net worth | Assets − Debts |
Two ways to grow it
There are only two levers—grow assets (save and invest) or shrink debts (pay them down). Doing both is fastest. When income rises, don't let spending rise with it; route the gap into assets or repayment and net worth visibly improves.
Common myths
- “High salary = rich” → Salary is a flow; net worth is the balance. Earn a lot but spend it all, and it won't grow.
- “Owning a home means high net worth” → A big mortgage can leave real net worth small. Always subtract the debt.
- “Calculate it often” → Once a year is plenty. Too often and small swings rattle you.
Frequently Asked Questions
Do I count my home and car?
Yes—use what you'd get if you sold today, and subtract any remaining loan as debt. Cars depreciate, so value them conservatively at current market price.
Do pensions count?
They aren't spendable now, so many list them separately or leave them out. At first, keep it simple with what you could turn into cash right away.
Is negative net worth a disaster?
No. It's common while you carry student loans or a mortgage. If it trends toward positive each year, you're doing fine.
How often should I check?
Once a year, at the same point (say your birthday or year-end), and compare. Measuring the same way each time is the key.
Fastest way to grow it?
Pay down high-rate debt to shrink liabilities, and when income rises, hold spending flat and route the gap into saving and investing. Unflashy, but the surest two moves.