How to Calculate Your Net Worth: A Complete Guide

It’s time for a how-to tutorial, pals: how to calculate your net worth.

Calculating and tracking your net worth over time isn’t just for people with Scrooge-McDuck money—it’s one of the best ways to get a quick look at your overall financial situation and to track trends over time, even (ahem, especially) if your net worth might be a negative number right now.

It’s a habit I’ve adopted to keep an eye on both the good (saving more money for retirement) and the other (paying off a car loan) with my money,. It reminds me that instead of focusing on just one piece of my financial picture, I should pay attention to it as a whole—and it’s not at all hard to do.

So if you want to get a solid overview of your finances through a single number? You’re in the right place. Here’s everything you need to know about your net worth and how to calculate it.

What is your net worth?

Your net worth is a single number that shows you the difference between what you currently own, and what you currently owe. It’s the sum of all of your assets (cash, investments, a house, etc.) minus the sum of your liabilities (student loans, car loans, etc.). It’s one number that gives you a quick look at your overall financial life at a point in time.

Your net worth can be positive or negative, depending on where you stand—and even if you think you might end up with a negative number, it’s still a good idea to calculate your net worth.

Why is it a good idea to calculate your net worth?

There are plenty of good reasons to know your net worth, even if you’re not feeling like Ms. Moneybags just yet.

  • See trends over time. Your net worth is most useful when it’s viewed as part of a trend, not necessarily a stand-alone number. No matter where you’re starting from, if you’re trending towards where you want to be, that’s a good sign—and one that your net worth is uniquely suited to tracking.
  • Get a holistic view of your money. If you’re focused on your savings account balances, you might not notice that your investments have gone way up over the past few years—and the same goes for your credit card balances. Your net worth is a great way to take a look at your whole financial life in one place.
  • Help you plan. Once you have a snapshot of where you are, you’ll be better prepared to make plans to get to where you want to be in the future.
  • Keep you aligned with your goals. It’s true what they say: what gets measured, gets managed. Tracking your net worth can be a great way to help you stay focused on your goals over the long term.
  • It’s impartial. A dollar put towards any of your financial goals can help improve your net worth, whether it’s paying off a personal debt or upping your emergency fund. Whichever is most important to you will show in your overall net worth—which can help you feel more OK with slower progress in other areas, since they might not be your focus.

How to calculate your net worth

There’s a very short, simple formula to calculate your net worth.

Assets – Liabilities = Net Worth

Easy, right? I guess our work here is done.

The thing is, that’s only easy if you have a solid understanding of your assets and liabilities—and even if you do, adding them all up isn’t really a mental-math task. So let’s dig into the five steps you should actually follow to calculate your net worth.

Step One: Set up a spreadsheet.

First and foremost, the best way to keep tabs on your net worth over time is a simple spreadsheet. Maybe you add it as a tab to an existing spreadsheet, maybe it lives on its own, but it’s a quick, easy, and secure way to keep track of your net worth over time. You can start with this free template to save time if you’re tracking for the first time—just delete any of the rows that don’t apply to your life right now!

Step Two: List your assets.

Make a list, either on paper or directly in your spreadsheet, of all of the different assets you have. This can include any of the following:

  • Investments
  • Savings accounts
  • Homes
  • Cars

Basically, you can list anything that you own that has resale value. Some of your assets might be illiquid—you can’t sell them quickly, but you can sell them, like a house—and other will be liquid, meaning you can access the cash value fairly quickly (this is especially true of actual cash!).

When it comes to any kind of physical asset, whether it’s a house or a priceless antique, you’ll want to list the current resale value, not the price you paid for it or the portion you’ve paid off if you owe money, like a mortgage on your house. That’s up next.

Step Three: List your debts.

Next, make a list of your debts. Some of your debts might be money you owe towards the assets you own, like a car loan or a mortgage, but others might be unrelated, like your student loans, line of credit, or credit card debt.

Step Four: Get accurate numbers.

Once you’ve listed your assets and your debts, make sure to log in to the related accounts and get up-to-date, accurate numbers for each one. The whole point is to get a comprehensive look at exactly where you stand at a moment in time, so it really is worth the time to log in to a few tools.

If you’re including assets that are harder to value, like a house you bought years ago, or a used car you own, do your best to find independent sources for your numbers. I personally use Canadian Black Book to get an impartial estimate of my car’s value for our net worth, and I rely on conservative estimates of home price increases in our area to update our home’s value.

Step Five: Track on a regular basis.

Some people track their net worth monthly, others prefer quarterly, and others like to look at it on an annual basis. While there’s no one right way to do it, monthly and quarterly are the best options for tracking your net worth in my opinion—they’re far enough apart that you don’t need to worry about daily fluctuations and you don’t need to log in to every account once a week, but they’re close enough together that you’ll be able to see trends over time (it’ll take you a while to see year-over-year trends, after all).

What are the problems with calculating your net worth?

While tracking your net worth is undeniably valuable, it’s not perfect—which is true of almost every method of managing your money. Here are some of the issues to watch out for when you’re tracking your net worth.

  • It’s not 100% within your control. If your net worth includes investments (and it should, investing is a great way to build wealth!) then your total net worth isn’t going to be something you can entirely control. Your investments can go up or down, which will impact your net worth. When that happens, just make sure to remember that you’re tracking over the long term.
  • No real consensus on what’s included (or not). There are some variations between how different people advise you to track your net worth, and none of them are wrong—they’re just different. Some people track all of their accounts, including short-term accounts like their chequing and their emergency savings, while others focus on solely assets intended for the long-term, like retirement accounts, debt repayment, and assets like a car and a house. That approach can reduce the amount of volatility in your net worth—so if you had to tap into your emergency fund, you wouldn’t see a drop in your net worth—but it also provides a lower total since you’re not including all of your assets. The most important thing is that you’re consistent in the assets and debts that you choose to include over time.

Free net worth spreadsheet template

To help you get started tracking your net worth, I’ve put together a free spreadsheet with formulas all set up to help you track monthly or quarterly. All you need to do is change the titles of each column based on when you want to update your net worth, and you’ll be all set for a year (or more!) of tracking.

a free net worth tracking spreadsheet

Get my free net worth spreadsheet now

Everything you need to start keeping tabs on one of the most important numbers in your financial life: your net worth.

Tracking your net worth will help you achieve your goals

The first step to getting where you want to go is understanding where you’re starting from. Your net worth is one of the best ways to get that kind of understanding when it comes to your money, because it helps you see everything all at once—and while there’s a time and place for diving deep into understanding each part of your financial picture, it’s equally important to understand the picture as a whole.

So what are you waiting for? Grab that spreadsheet and start tracking your net worth ASAP.