How Do You Calculate Your Net Worth?

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If you’ve ever wondered “How do you calculate your net worth?” we’re here to help. Completing this simple exercise is one of the most important things you can do to really improve your financial bottom line.

Our family’s finances didn’t really start moving in the right direction until I began calculating our Net Worth each month.

Before then, I could fool myself too easily. I could feel virtuous about putting $100 in our savings account, for instance, and conveniently overlook the fact that I also charged $150 on a credit card that month on impulse buys.

A cup of coffee in a white mug and a calculator on a wood desk.

The only honest way to measure where we really stand financially is by figuring our Net Worth.

Net Worth, as you probably know, is the difference between what we own and what we owe. For an easy illustration, let’s look at my net worth when I was in my early 20s:

Young Eliza's net worth

As you can see, I had very few assets, borrowed money to buy a car, and used a credit card for stuff I couldn’t afford.

Now that I’m older and wiser (?), our net worth generally moves in the right direction and this is an an exercise I actually look forward to.

I calculate our net worth at the first of every month, and my goal is to keep that bottom line moving up, up, up.

If you do the same, you’ll discover that your finances can improve dramatically over time.

Start With Your Assets

To do this calculation you can simply jot the figures on a piece of paper and use a calculator, or you can create a simple spreadsheet with a program like Excel. (You can download Money Under 30’s simple Excel Net Worth spreadsheet here.)

Start by adding up your assets. If you’re a homeowner, list the current value of your home. If you’re not sure, a site like Zillow can give you a rough estimate for now. Your professional neighborhood realtor would probably be happy to give you a more accurate market value, too.

Go out to your car and write down the mileage and condition, enter the info at Kelley Blue Book, and figure out the private party value. Check the current balances for your bank accounts, retirement funds, investments, etc., and add those to the list.

Don’t forget things like your grandpa’s coin collection, or any valuable jewelry, antiques, artwork, etc. you own. Just be realistic about the cash that the sale of such items would generate. If you’ve ever held an estate sale or tried to liquidate someone else’s assets, you’ve probably learned that what people are willing to pay for others’ treasures is often considerably less than the appraised value.

Add everything up, and you’ll have a pretty good idea of your total Assets.

Debt Next…

Next, make a list of every single one of your debts: mortgage balance, car loan, credit cards, lines of credit, student loans, etc. Add these up, and you’ll have your total debts, or Liabilities.

Now, simply subtract the Liabilities from the Assets to figure your Net Worth.

The result will be different for each of us. If yours is a negative number, don’t despair! When I was 21, I had zero assets, $5000 in credit card debt, a new car I couldn’t afford, and an upside-down car loan with a 21% interest rate!

Regardless of what your financial situation is today, you can acknowledge that this is your starting place and resolve to get your net worth moving in a positive direction in the days ahead.

Increasing Your Net Worth

By figuring our net worth every month, we can see the effects of our financial decisions in a very real and immediate way.

If I charge a $25 sweater on my Visa card, our net worth goes down $25. If I instead contribute that $25 to my Roth IRA, our net worth goes up $25. So simple!

To increase your net worth, take a two-pronged approach. Focus on paying off credit card balances and loans. (Here are strategies on how to crush debt.) At the same time, save and invest more money so that your assets begin to grow.

Now It’s Your Turn

Get out your calculator and do the calculation for yourself. Are you about where you expected to be? Where do you want to be by the end of the year? We’d love to hear your thoughts about this exercise over at the Money Diet Community Facebook Group.

Here’s a simple goal: calculate your net worth each month this year, and increase your bottom line every month.

Are you already in the habit of regularly tracking your net worth? Perhaps you’d like to set a specific Net Worth Goal for the end of this year.

And remember, no matter what the spreadsheet says – YOU are worth more than the finest gold or silver.

Best always,

Eliza Cross's signature

P.S. If you use Pinterest to save ideas, here’s a handy pin:

Figure your net worth

2 thoughts on “How Do You Calculate Your Net Worth?”

  1. Love the Money Diet! I have a suggestion: I think it’s prudent to assign $0 to your personal possessions. As you point out, their actual value is far lower than you think. Even if that’s a Picasso hanging on your wall, there are costs involved in any sale. Cars, boats etc. may be a different story. (There too you must look at total cost of ownership including insurance, maintenance, fees, depreciation etc.) Most, by far most, “luxury” items we might buy thinking “it’s an investment” simply are not. That’s just what we tell ourselves to somehow make it okay.

    Your financial security should never come down to selling your personal possessions. So, it’s prudent not to delude yourself about the true state of your financial situation. This is one area where conservative is best.

    Cheers to a wonderful 2021,


  2. Our net worth isn’t the best. I do pretty goal with what my husband makes but we want land with a home. Where we live we are not allowed to have chickens and I really want to raise chickens for meat and eggs. So to me my net worth is adding to the savings to be able to buy that. We promised God to never go into debt ever again and so if we want land we have to pay for it in full. Pray that it is God’s plan for us also. God’s blessing to you and yours


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