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Klaus Vedfelt/Getty Images October 26, 2022 Miranda Marquit is a contributing writer for Bankrate. Miranda writes about topics related to investing, saving and homebuying. Brian Beers is the managing editor for the Wealth team at Bankrate. He oversees editorial coverage of banking, investing, the economy and all things money. Bankrate logo The Bankrate promise
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Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our investing reporters and editors focus on the points consumers care about most — how to get started, the best brokers, types of investment accounts, how to choose investments and more — so you can feel confident when investing your money. Investing disclosure: The investment information provided in this table is for informational and general educational purposes only and should not be construed as investment or financial advice. Bankrate does not offer advisory or brokerage services, nor does it provide individualized recommendations or personalized investment advice. Investment decisions should be based on an evaluation of your own personal financial situation, needs, risk tolerance and investment objectives. Investing involves risk including the potential loss of principal. Bankrate logo Editorial integrity
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. When diagnosing your financial health, there are a number of indicators to use, from your credit score to the . However, one measure that many overlook is net worth. Your net worth represents how much wealth you have, measured by assets like a house, cars, 401(k), jewelry or cash in the bank, minus the debt obligations you have, or what you owe. When you understand your net worth, you can make better decisions about what you do with your money, as well as get a clearer picture of how close you are to accomplishing your goals. What is net worth
In general, your net worth is your personal balance sheet. It’s a way for you to get a snapshot of where your finances stand right now. Basically, it’s a measure of what you own minus what you owe to others. “Tracking it gives you a good measure of whether you’re headed in the right direction with a growing net worth,” says Crystal Rau, CFP, founder of Beyond Balanced Financial Planning. As you move forward in your financial journey, the goal should be to increase your assets while decreasing your liabilities. The greater your assets, the greater your wealth — and this is especially true if you have fewer debt obligations weighing you down. How to figure out net worth
The basic formula to calculate your net worth is to add up all of your assets, and then add up all of your liabilities. Once you have those two numbers, subtract your liabilities from your assets. That number is your net worth. Assets
Your assets are the things you own. They are items of value, as well as items that can potentially provide income down the road. Assets that you should add up include: Current market value of real estate: This includes the , as well as any rental properties or other properties you own. Current market value of your vehicles: Current value of all your vehicles, including cars, boats, motorcycles and other vehicles. Value of your items of significant value: Consider any fine artwork, collectibles, antiques and jewelry that you have. Cash value of your bank accounts: Tally up all the money you have in your savings and checking accounts, as well as certificates of deposit. Market value of your investment accounts: Balances of . Your 401(k) and IRA should be included in your net worth calculation. You can find information about the current market value of some of the assets you own, such as collectibles, by looking on eBay, and using Edmunds or Kelley Blue Book to determine the current value of your vehicles. Liabilities
Liabilities represent what you owe to others. You should add these up and subtract them from your assets. Mortgages: Outstanding balances on all your property loans, including of your primary residence, home equity loans, as well as what you owe on rental properties. Vehicle loans: Any money you owe on a car, boat or other vehicle. Credit card debt: Total all of your credit card balances. Personal loans: Any loan you have from an online lender, payday lender, bank or other financial institution. Student loans: Everything you owe on private and federal student loans. Medical debt: Unpaid medical bills, or a payment plan for medical bills — even if you aren’t paying interest. Back taxes and liens: If you owe back taxes, have a or have a lien against any of your property, those amounts should be considered liabilities. As you might expect, it’s possible that you might have more liabilities than assets after making this calculation. If this is the case, you have a negative net worth. Your goal should be to pay down debt and boost savings to help you bring your net worth above zero. If you want a little guidance as you figure out your net worth, a can help you include all the relevant assets and liabilities — and do the math on your behalf. What is a good net worth
According to the most recent from the Federal Reserve, the median net worth for an American family is $121,700. However, for households headed by someone age 35 or younger, the median net worth was just $13,900. It grew to $254,800 for those age 75 and older. However, the “average” net worth of a U.S. family was $748,800, the Fed survey found. During your lifetime, your net worth will fluctuate, depending on what kind of debt you have, how much your home has grown in value and how much you have in your retirement account. As your finances improve and as you pay down debt, you should see an increase in net worth. But what makes a good net worth
A 2022 points out that many Americans believe a net worth of $2.2 million is needed to be considered “wealthy.” However, not everyone thinks you need to have more than $2 million to have a good net worth. “Really, it’s about the experiences you want to have and the freedom to pursue those experiences,” says Todd Tresidder, a former hedge fund manager, financial coach and founder of Financial Mentor. “A good net worth is one that allows you the flexibility to live your life comfortably and in a way that enriches you.” You can compare yourself to others using net worth, Tresidder continues, but tracking your net worth should be more about comparing your current self with your past self. “It’s a way to measure your own financial progress, and you’re the only person you should be competing with,” he says. There are some time-tested ways to boost your net worth. “A growing net worth is a sign that you are making smart decisions,” Rau says. “Decisions like saving a portion of your paycheck, growing your investments or paying down debt are all going to improve your net worth.” How to use your net worth
Knowledge of your net worth can be a useful tool to help you see where you stand today as compared to where you were a year ago or a decade ago. Additionally, net worth can also provide you with a reality check when it comes to determining whether you’re on track to reach your financial goals. Tresidder suggests that you calculate your net worth on a regular basis. “Decide how often you want to measure your net worth, whether it’s monthly, twice a year or annually,” he says. “The key is to check your net worth at the same time in the cycle. If you look at it at the first of the month, your next calculation should also be the first of the month.” For many people, income, investment contributions and debt payments are all made on a schedule, so checking in at the same point in the schedule makes sense. It allows you to compare apples to apples. If your assets and liabilities don’t show you what you want to see, you can use that information to change course and improve your financial picture. When you see a lot of liabilities dragging your net worth down, working on growing your assets or can help you improve your financial health. You can also use your net worth to reinforce good habits. When you’re hitting your goals, you can see what you’re doing right — and feel encouraged to keep pressing forward. — Bankrate’s contributed to an update of this story. SHARE: Miranda Marquit is a contributing writer for Bankrate. Miranda writes about topics related to investing, saving and homebuying. Brian Beers is the managing editor for the Wealth team at Bankrate. He oversees editorial coverage of banking, investing, the economy and all things money. Related Articles