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Net Worth
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Get a complete picture of your financial health.
Your **Net Worth** is the clearest single measure of your personal financial health. This calculator quickly determines your **personal wealth** by totaling your **assets and liabilities**, providing a crucial benchmark for tracking your financial progress over time.
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The **Net Worth Calculator** is a fundamental tool in personal finance used to determine an individual's **financial health** at a specific point in time. It provides the dollar value of everything you own (your **assets**) minus everything you owe (your **liabilities**). This single figure, your net worth, serves as a financial report card that is essential for setting goals, tracking progress toward retirement, and making major financial decisions.
If your net worth is **positive**, you have more assets than debt. If it's **negative**, your debts exceed the value of your assets. The goal for most people is to see this number steadily increase over their working life.
The calculation for net worth is incredibly simple, relying only on two primary inputs: your total assets and your total liabilities.
To use this formula effectively, you first calculate the sum of all your current assets (at their current market value) and the sum of all your current outstanding debts (liabilities). Subtracting the latter from the former yields your final personal net worth.
Let’s walk through an example for an individual, Sarah, to demonstrate how the **net worth formula** works.
Net Worth = Total Assets ($420,000) − Total Liabilities ($255,000)
Calculating your net worth is not just an exercise in budgeting—it's a critical tool for strategic financial planning.
A "good" net worth is entirely relative and depends heavily on your age, income, location, and career stage. For most people, a **positive** and **growing** net worth is the primary goal. Financial experts often suggest that your net worth should be increasing steadily toward your desired retirement savings number.
Yes, your primary residence is included as an **asset** at its current market value. However, the outstanding mortgage balance on that home must also be included as a **liability**. The difference between the two is your home equity, which is the net contribution to your net worth.
A negative net worth is common, especially for young people with student loans and mortgages who are early in their careers. It simply means your debts are greater than the value of what you own. The key is to create a plan to systematically reduce your liabilities and increase your assets to move toward a positive net worth over time.
It is generally recommended to check your net worth **once or twice a year**. This allows enough time for your investments and debt payments to significantly change the number, giving you a meaningful figure to track your progress and evaluate your financial strategy.
Understanding your net worth is the first step toward achieving financial independence. Continue your journey to robust personal wealth by exploring our other related tools like the **Retirement Calculator** or the **Loan EMI Calculator** to manage your income and debt more effectively.