How to Calculate Your Net Worth: Six Steps for 2026

Why net worth is the one number that matters

Income tells you what comes in each month. Net worth tells you what you have actually kept: everything you own minus everything you owe. A household earning $120,000 and spending $119,000 of it ends up poorer, year after year, than one earning $60,000 and keeping $10,000. Net worth is the running total of that difference — one number, slow-moving, and honest in a way a paycheque is not. This guide works through it on one example: $635,000 of assets and $360,500 of debts, a net worth of $274,500. Every figure here is checked against the net worth calculator.

Step 1: List what you own

Start with the assets — everything you own that is worth money. In our example there are six: $25,000 of cash and savings, $60,000 of investments, $85,000 of retirement accounts, a home worth $425,000, vehicles worth $28,000, and $12,000 of other assets. Add them: $25,000 + $60,000 + $85,000 + $425,000 + $28,000 + $12,000 = $635,000. Two rules keep this step honest. First, value things at what they would sell for today, not what you paid — the home at market value, the car at resale value. Second, count only what is really yours: an unvested pension and an unsold business do not belong here. If you are unsure about a value, use the lower one.

Step 2: List what you owe

Now the debts — everything you owe, to anyone. In our example there are five: a $310,000 mortgage, $18,000 of auto loans, $22,000 of student loans, $4,500 of credit cards, and $6,000 of other debts. Add them: $310,000 + $18,000 + $22,000 + $4,500 + $6,000 = $360,500. Do not leave out the small ones: the $4,500 of credit cards is the smallest debt here and also the most expensive money you owe — its rate is probably five times the mortgage rate. And do not leave out money owed to family or friends — it is still a debt, even if nobody sends a statement. Most people are surprised by the total.

Step 3: Subtract

Net worth is the difference: $635,000 − $360,500 = $274,500. That is the whole calculation. It can be negative, and that is useful information, not a failure: with $700,000 of debts against the same $635,000 of assets the net worth is -$65,000.00 — more is owed than owned — and the first job is to stop the number falling. A net worth of $0.00, with nothing owned and nothing owed, is a clean starting line. Notice what the subtraction rewards: every dollar of debt paid off and every dollar of assets added moves the net worth by exactly one dollar.

Step 4: Work out the debt-to-asset ratio

The net worth alone does not say how stretched you are. Divide the debts by the assets: $360,500 ÷ $635,000 = 56.77% — just over half of what you own is owed to someone else. Under 50% is a common yardstick, and reaching it from here means cutting the debts to $317,500.00, a $43,000.00 reduction. The ratio scales: a $27,450 net worth on $63,500 of assets has the same 56.77% ratio. One warning: if the assets are $0.00 the ratio is undefined — you cannot divide by zero — so the calculator shows a dash. And with $25,000 of cash as the only asset and no debts, the ratio is 0.00% and the net worth is the whole $25,000.

Step 5: Set a target

A net worth without a target is just a number. Pick one and work backwards. For a $300,000 net worth at these debts you need $660,500 of assets — which, with the other $610,000 of assets held fixed, is $50,500 of cash. One cent less, $50,499.99, gives $299,999.99. Through the home, the same target needs a $450,500 home value. For a $500,000 net worth you need $860,500 of assets altogether, and for a 50% ratio the debts have to fall to $317,500.00. Targets turn the net worth from a score into a plan: $50,500 of cash is a savings goal with a number on it, and $317,500 of debts is a payoff goal with a number on it.

Step 6: Re-check it regularly

Work the number out again every three to six months, with fresh values. The direction matters more than any single reading: a net worth rising $5,000 a quarter is a household getting richer, whatever the starting point. Update the home value when the market moves — a $500,000 home lifts this example to $349,500 — and the debts as you pay them down: a $250,000 mortgage lifts it to $334,500 and cuts the ratio to 47.32%. Keep the same list each time, so the change is real. If the number falls, find the reason: a falling home value is market noise, but a rising credit card balance is a leak.

Three mistakes to avoid

First, counting the home at what you paid for it. A $425,000 home is worth $425,000 in your net worth whether you bought it for $300,000 or $500,000 — the purchase price is history. Second, forgetting the small debts. The $4,500 of credit cards and the $6,000 of other debts are $10,500 of the $360,500 total, and the credit cards are the most expensive money on the list. Third, checking the number once and never again. A net worth that is never re-checked is a photograph, not a measure.

What to do next

Run your own numbers through the net worth calculator and write the result down with today’s date. Then pick one target — $50,500 of cash for a $300,000 net worth, $317,500 of debts for a 50% ratio, or your own — and check again in three months. For the wider picture, see the mortgage calculator, the debt-to-income ratio calculator, the retirement savings calculator and the emergency fund calculator.