Net worth is everything you own minus everything you owe (total assets minus total liabilities). The Federal Reserve found that the median U.S. household net worth rose 37% between 2019 and 2022, the largest three-year jump in more than 40 years of tracking. Still, most Americans don’t know their net worth and have never calculated it.
It’s not because the math is difficult, but net worth goes uncalculated for most because people simply don’t understand why it matters or how to make it a useful metric. Net worth is the single most important number in your financial life. It’s the only number that captures your complete financial picture – everything you own, owe, and the gap between the two numbers. It’s the foundation of every meaningful financial decision from retirement planning, to debt repayment, and whether you’re staying on track to your goals. This guide covers all of what net worth is and how to calculate it in a step-by-step format.
What is net worth?
Net worth is a simple calculation with significant implications. To calculate it, the formula is as follows:
Net worth = total assets - total liabilities
Your assets are everything of value you own. Your liabilities are everything you owe. Subtract one from the other and you have your net worth. A positive number indicates you own more than you owe. A negative number (which is more common than you might think) means the opposite.
Here’s a straightforward example: if you have $350,000 in assets and $120,000 in liabilities, your net worth is $230,000. What makes net worth more useful than income? Income tells you how much money is flowing in. Net worth tells you how much of it you’ve actually kept. Two people earning the same $150,000 per year salary can have wildly different net worths depending on how much they’ve saved, invested, and how much debt they’re carrying. Income is a snapshot of the current moment, but net worth is the running score.
What counts as an asset?
Assets are things of real, current value. Here’s what you should include in your net worth:
- Cash and bank accounts - this includes checking, savings, money market accounts.
- Investment and brokerage accounts - taxable investment accounts and all holdings including stocks, bonds, ETFs, mutual funds, etc.
- Retirement accounts – 401(k), 403(b), IRA, Roth IRA, SEP IRA, HSA, etc.
- Home equity – the current market value of your home minus what you still owe on the mortgage (this will be discussed in greater detail).
- Vehicle value – use a reasonable current market estimate, not what you paid for it.
- Business ownership stakes – your share of any business you own, at a reasonable valuation.
- Cash-value life insurance – the cash surrender value, not the death benefit.
- Valuable collections/artwork/jewelry – if you have personal items with real tangible value and marketability, you can include them.
What to leave out: personal possessions with limited value, which include furniture, clothing, electronics, and other minor personal items. They have value in a literal sense, but they depreciate quickly, are hard to value accurately, and aren’t liquid.
A common mistake to avoid is counting your home’s full value instead of just the equity. If your home is worth $500,000, but you still owe $300,000, the asset is worth $200,000, not $500,000.
What counts as a liability?
Liabilities are amounts you owe to others. Be thorough here; missed debts are a common reason net worth calculations come out too optimistic.
- Mortgage balance – what you still owe, not the original loan amount.
- Auto loans – the current balance should be included.
- Student loans – includes the balance of federal and private, any in deferment or on income-driven repayment.
- Credit card balance – include the full balance, not just the minimum payment.
- Personal loans and lines of credit – this includes HELOCs as well.
- Unpaid taxes – if you owe back taxes or have a significant capital gains event pending, you can include them in liabilities.
A common mistake is forgetting deferred taxes on pre-tax retirement accounts. Your 401(k) balance and traditional IRA balances are listed as assets at their full value, but you haven’t yet paid taxes on them. Some financial planners apply an estimated tax haircut to pre-tax money to reflect this. It’s technically correct, though complex to model precisely. At a minimum, be aware that your gross 401(k) balance overstates the after-tax value.
How to calculate your net worth: step-by-step
Step 1: list every asset with its current value
Go through each of your accounts, pull the current balance or estimated value. This will give you the most up-to-date and accurate net worth information.
Step 2: list every liability with its current balance
Repeat the same process as step 1 and pull your current balance owed and not the original loan amount or monthly payment.
Step 3: add up each column (own vs. owed) and subtract them
Total your assets and then your liabilities. Subtract your liabilities from your assets. Here’s a relatable real-world example:
Assets
Value
Home equity ($480k home - $290k mortgage)
$190,000
401(k)
$145,000
Roth IRA
$42,000
Brokerage account
$31,000
Savings account
$22,000
Checking account
$8,000
Vehicle (current market value)
$18,000
Total assets
$456,000
Liabilities
Balance
Auto loan
$11,000
Credit card balance
$4,200
Student loans
$14,800
Total liabilities
$30,000
Net worth = $456,000 - $30,000 = $426,000
Average net worth by age in the U.S.
The Federal Reserve’s Survey of Consumer Finances (SCF) is the most authoritative source of household wealth data in the U.S. Conducted every three years, it surveys thousands of households about their complete financial picture. The most recent data was collected in 2022 and released in October 2023. The results of the 2025 survey are expected in late 2026.
Why median matters more than average
The 2022 SCF reports two headline figures: a median household net worth of $192,900 and a mean (average) of $1,063,700. That gap isn’t a typo. The top 10% of U.S. households control roughly two-thirds of all household wealth, according to the Federal Reserve Bank of St. Louis. A small number of extraordinarily wealthy households pull the average far above where most Americans actually land.
When benchmarking yourself, use the median. It tells you what the household in the exact middle of the distribution looks like. Half of households in that group have more, the other half have less. The average will make almost everyone feel behind even when they’re not.
Median and mean net worth by age group (2022 SCF)
Age group
Median net worth
Mean net worth
Under 35
$39,000
$183,500
35-44
$135,600
$548,100
45-54
$247,200
$975,800
55-64
$364,500
$1,566,900
65-74
$409,900
$1,794,600
75+
$335,600
$1,624,100
All households
$192,900
$1,063,700
A few things worth noting in this data. First, the jump from the 35-44 bracket to the 55-64 bracket is roughly 2.7x. This reflects what consistent saving and compounding looks like over two decades of peak earning years. Second, net worth peaks in the 65-74 bracket and dips slightly after 75, when retirees are drawing down on their savings. That dip doesn’t signal financial trouble, it’s the system working as designed. Third, at every age, the gap between median and mean is stark. For someone 45-54, the median is $247,200, but the average is nearly $976,000. Those are two very different mental benchmarks.
One important note on using these benchmarks
These numbers describe typical American households across all income levels. If you’re a high-income household with complex finances (multiple accounts, equity compensation, real estate, etc.), your relevant peer group looks different than the national median. These figures are most useful as directional context, not as precise finish lines.
What matters more than hitting a number is ensuring you’re in the right direction. A 40-year-old with $80,000 in net worth who’s on a clear trajectory with growing income and controlled debt is in a fundamentally different position than someone at the same number with no savings rate and ballooning liabilities.
What is a good net worth?
There’s no universal answer, and be skeptical of anyone who offers one without context. A 2025 Charles Schwab Modern Wealth Survey found that Americans associate a net worth of $2.3 million with being “wealthy.” That figure describes an endpoint and not a benchmark, however.
More useful questions include:
- Is your net worth growing year over year?
- Are your liabilities shrinking relative to your assets?
- Are you building the assets (retirement savings, home equity, invested capital) that will fund the life you want in the coming decades?
One widely cited rule of thumb: multiply your age by your pre-tax income, then divide by 10. A 45-year-old earning $100,000 would target a net worth of $450,000. The SCF median for that age group is $247,200, so this target puts you well above the median. Whether it’s right for your goals is a different question, though.
Net worth, financial independence, and retirement
High income doesn’t automatically create wealth. This is one of the most counterintuitive truths in personal finance, and it’s worth diving into.
As we mentioned previously, two households earning $150,000 per year can have dramatically different net worths depending on their savings rate, debts owed, how early they began investing, and what they spend their money on over time. Income tells you the rate at which money arrives, but net worth tells you what you’re doing with it.
Net worth also connects directly to financial independence. The question “can I afford to retire?” is really a net worth question. Specifically, it asks whether you have enough assets generating return to fund your life without working. Income is irrelevant once you stop receiving it. Net worth is where you find your answers.
For goal setting, net worth provides an honest foundation. Home purchase targets, early retirement projections, estate planning, and financial independence calculations all require knowing your net worth. If you don’t, you’re just estimating.
How to track your net worth over time
Calculating your net worth is useful, but tracking it over time is where the real value appears. Net worth tracking is a trend line. A series of data points tells you whether the work you’re doing is moving the needle toward your goals.
How often to track
When you’re starting out or working through significant changes such as a new debt, a job change, or a major purchase, monthly tracking makes sense. It keeps you oriented and makes any problems visible before they compound.
Once your finances are established and relatively stable, quarterly or even annual tracking is enough. The goal isn’t to obsess over short-term fluctuations. Markets move daily and home values can shift. What you’re looking for is the six to 12 month trend, not the week-over-week number.
Method 1: Manual spreadsheet
A spreadsheet gives you complete control over the format, updating schedule, and putting numbers exactly where you want them. The downside is that this method requires discipline. You have to pull every balance and data point. The more accounts you have, the more friction in getting this done. Many people start strong and then fall off because it is more time-intensive.
Method 2: An automated app or platform
The Monarch platform connects your financial accounts so you can automatically pull balances and have your net worth calculated in real time. Each time you log on to your dashboard, your net worth is already updated.
The tradeoff here is account connectivity. You will need to authorize access for each institution, and occasionally reconnect or re-authenticate for security purposes. Monarch is subscription only: no ads, no selling your data. Your account access serves you, not advertisers.
Manual spreadsheet
Monarch
Setup
You build it
Connect accounts once
Ongoing effort
Update manually every time
Automatic
Data control
Fully local
Third-party access
Real-time updates
Only when you update
Daily or continuous
Best for
Single account, strong habit
Multiple accounts, consistency, and ease
What to watch for
Don’t react to week-over-week fluctuations, as that’s just noise. Look for trends over six to 12 months. A falling net worth during a period of heavy investment (buying a home, paying down debt aggressively to restructure your balance sheet) isn’t necessarily bad. The context matters.
Watch the ratio of your assets to liabilities over time. This ratio should improve. Also pay attention to which assets are growing. Your retirement and investment accounts compound over time, whereas your vehicle depreciates.
How Monarch tracks your net worth automatically
Once you’ve done the calculation once, you understand what your net worth is and why it matters. The question is now whether you want to keep doing it manually or let a platform like Monarch handle it.
Monarch connects all your financial accounts, from bank accounts, investments, retirement accounts, loans, credit cards, and real estate. It calculates your net worth automatically, every day. When you log in, your complete financial picture is already there. No spreadsheet required, no manual balance pulling, no tedious arithmetic.
The net worth chart shows your trend over time with filters by account type (cash, investments, credit, property) so you can see exactly what’s driving changes. If your net worth jumped $15,000 in a month, you can see in seconds whether that was investment growth, debt paydown, or both.
Monarch Plus includes net worth forecasting: a projection of where you’re headed based on your actual spending and saving patterns. It answers the question “will my net worth grow and how much?” with real numbers, and honest projections. You can also model scenarios like what happens if you increase your savings rate by 3%? Or what if you pay off a car loan early? The impact is visualized, so you can see the impact before you decide.
For couples and households managing finances together, both partners see the same complete picture with account-level detail. That shared visibility is harder to replicate than it sounds and it changes how households make financial decisions together.
Conclusion
Net worth is worth knowing. It is the clearest measure of whether your financial decisions are building toward something. Calculate your net worth once using the steps above and then decide how you want to update it periodically. For ease and daily updates to your net worth, connect your accounts to Monarch.
Frequently asked questions
Does net worth include your house?
Yes, but only the equity, not the full house value. Your equity is the current market value of your home minus what you still owe on the mortgage. If your home is worth $500,000 and you owe $320,000, your equity is $180,000. This is the number that counts toward your net worth.
Does net worth include retirement accounts?
Yes, your retirement accounts all are included in assets with their current balances. One nuance to consider is that pre-tax balances will be taxed when you withdraw them, so the after-tax value is somewhat lower than the gross balance shown. Most people include the gross balance and note this caveat in their planning.
What is a negative net worth?
A negative net worth means your liabilities exceed your assets. This is common early in life as student or car loans and limited cash savings can easily produce a negative number. It’s not a crisis, just your starting point. The goal is to understand where you are and build toward positive territory. Getting clear on a negative net worth is better than not knowing.
How do I increase my net worth?
There are two levers to grow your net worth. First, you can grow your assets. Secondly, you can reduce liabilities. In practice this means saving and investing consistently (growing assets) and paying down high-interest debt (which reduces liabilities faster than low-interest debt warrants). For specific recommendations and strategies on debt repayment, check out Monarch’s guide. The savings rate matters more than almost any other single variable. A household saving 20% of income for 20 years will likely build substantial net worth in most market conditions.
What’s the difference between net worth and income?
Income is the rate at which money arrives. Net worth is the accumulation of what you’ve kept, grown, and not spent. High income doesn’t guarantee high net worth; it just creates the opportunity to build it. Net worth is the more honest measure of financial health.
What is the median net worth in America?
According to the 2022 Federal Reserve Survey of Consumer Finances, the median U.S. household net worth is $192,900. The mean (average) is $1,063,700, but this figure is heavily skewed upward by the wealthiest households. For most people, the median is the more relevant benchmark.
Does life insurance count as net worth?
Only certain types count. Term life insurance has no cash value and only pays out if you die. Permanent life insurance policies (whole and universal life) accumulate a cash surrender value over time and that value does count as an asset.
