Free Financial Compass

What is Net Worth and Why Does It Matter?

Your net worth is the ultimate measure of your financial health. It's calculated with a simple formula: Assets - Liabilities = Net Worth. In other words, it's what you own minus what you owe. Tracking your net worth over time is the best way to see if your financial decisions are moving you in the right direction.

A growing net worth indicates that you are building wealth, increasing your assets, and/or reducing your debt. It provides a "big picture" view that goes beyond just your income or your bank balance. This calculator makes it easy to take that financial snapshot at any time.

Net Worth Calculator

Calculate your financial net worth by listing your assets (what you own) and liabilities (what you owe).

Interpreting Your Results

Your net worth statement is broken down into three key components:

• Total Assets: This is the sum of everything you own. The higher this number, the better.
• Total Liabilities: This is the sum of everything you owe. Your goal is generally to reduce this number over time.
• Your Net Worth: The final calculation. A positive net worth is a great sign of financial health. If it's negative (which is common for young people with student loans), it provides a clear baseline from which you can work to improve. The goal is to see this number consistently increase when you track it every 6-12 months.