Learn
How to calculate your net worth, and why to track it
By the My AI Fin App team · Updated October 1, 2026 · 7 min read
Net worth is the single number that sums up your finances: what you own minus what you owe. It can be negative, especially early on, and that is fine. What matters most is which way it is moving.
The formula
Net worth = assets − liabilities. Assets are things you own that have a cash value. Liabilities are debts you owe. Add up each side and subtract.
It is a snapshot. Income and spending tell you about a month; net worth tells you where all of those months have left you so far.
What counts as an asset
Count things you could turn into money, at what they would realistically sell for today:
- Cash: checking, savings and money market accounts.
- Investments: brokerage accounts, retirement accounts, and any other investment accounts, at their current balance.
- Real estate: your home and any other property, at an estimate of today's market value, not what you paid.
- Vehicles: what the car would sell for now, which is usually much less than the purchase price.
- Other things of real resale value, if you choose: a business you own, collectibles, valuable equipment. Leave out everyday belongings like furniture and clothes; they are rarely worth much if sold and only inflate the number.
What counts as a liability
Count the full balance you owe, not the monthly payment:
- Mortgage and home equity loans.
- Car loans.
- Student loans.
- Credit card balances.
- Personal loans, medical debt, money owed to family, and any buy-now-pay-later balances.
A worked example
Assets: $3,500 in checking and savings, $28,000 in a retirement account, a home estimated at $310,000, and a car that would sell for $12,000. Total: $353,500.
Liabilities: a $255,000 mortgage, a $9,000 car loan, $21,000 of student loans and $4,200 on credit cards. Total: $289,200.
Net worth: $353,500 − $289,200 = $64,300. Notice that the home makes up most of the assets. Much of that wealth is not something you can spend, which is why net worth and cash on hand are different questions.
Negative net worth is normal early on
Graduates with student loans, people who have just bought a car, and anyone working through credit card debt often have a negative net worth. That is a starting point, not a verdict. Every debt payment and every dollar saved moves the number up, and crossing zero is a milestone worth noticing.
Why tracking it over time matters
A single net worth figure says little on its own. The trend says a lot. If it rises steadily, your saving and debt payoff are working, even in months when it does not feel like it. If it stalls or falls, something has changed: new debt, lower savings, or an asset that lost value.
Paying down debt raises net worth exactly as much as saving the same amount, which is easy to forget. Seeing the line move when a card balance shrinks makes debt payoff feel like progress, because it is.
Checking monthly or quarterly is plenty for most people. Day-to-day market moves can make investment balances jumpy, so look at the direction over several months rather than any single reading.
Keeping the number honest
Use realistic values for things you would have to sell, especially homes and cars, and update them occasionally. Include every debt, even the small ones you would rather forget. A net worth figure is only useful if you trust it.