- Net worth is assets minus liabilities — the one figure that moves only when you genuinely get wealthier or poorer.
- Value assets at what they would sell for today, and debts at today’s balance rather than the original amount.
- Include the home at market value and its mortgage as a liability; the gap between them is your home equity.
- Read the trend, not the reading — monthly is frequent enough to see it and infrequent enough to ignore market noise.
How to calculate your net worth
Net worth is everything you own minus everything you owe. List cash and savings, registered investments, your property at market value, and vehicles or anything else worth counting; then list the mortgage, loans and credit-card balances standing against them. The difference is the number.
Two rules keep that number honest. Assets go in at what they would sell for today, not what you paid — a home bought for $400,000 and now worth $550,000 counts as $550,000. Liabilities go in at today’s outstanding balance, not the original loan amount. The same rule catches cars: one goes in at what it would fetch today, which in the first couple of years is often well below the loan still standing against it.
A third rule is the one most net-worth calculators skip: $100,000 in a traditional 401(k) is not $100,000 in a Roth. Withdrawing from a traditional account triggers income tax at whatever rate applies then; a Roth never does. Investments split into two lines — tax-deferred and tax-free — and the result card reports both the conventional net-worth figure and what is left after the tax-deferred bucket's future tax bill.
A single reading is nearly useless; the trend is everything. The reason to record it monthly is that it catches the two things a checking-account balance hides completely: debt quietly growing, and asset values moving while you do nothing at all. It is also the only measure that treats a raise and a debt repayment as the same kind of progress, which is why it belongs on a chart in a way that income does not.
The math
Net worth = total assets − total liabilities. The split bar under the result divides total assets by the sum of assets and liabilities, so a bar weighted heavily toward assets means little of what you own is financed by someone else.
After-tax net worth subtracts one more thing: the tax the tax-deferred bucket will owe on withdrawal, estimated as that balance × your expected retirement tax rate. The tax-free bucket needs no adjustment — it was already taxed on the way in, or never taxed at all, depending on the account — and neither does anything outside registered investments, since this calculator doesn't model capital-gains tax on a taxable brokerage account or property.
The ratio worth watching alongside the number is debt-to-assets: total liabilities ÷ total assets. It says how much of what you own is really a lender’s claim, and it moves independently of net worth — a rising property market can lift your net worth and your leverage at the same time.
The judgement call here is valuation, not arithmetic. A home is worth what a buyer will pay; a private business or a pension is genuinely hard to value; a car loses value the entire time you own it. The retirement tax rate is a guess too — nobody knows their bracket decades out — so round conservatively on both, and re-enter the estimates only a few times a year. Consistency between readings matters far more than precision within any one of them.
Worked example
The calculator opens on $20,000 in cash, $60,000 tax-deferred, $30,000 tax-free, a $450,000 property and $25,000 of vehicles and other assets — $585,000 in assets. Against that: a $320,000 mortgage, $15,000 of loans and $3,000 on credit cards, so $338,000 in liabilities. Net worth is $585,000 − $338,000 = $247,000.
At a 30% expected retirement tax rate, the $60,000 tax-deferred balance still owes $18,000 in tax whenever it's withdrawn. After-tax net worth is $247,000 − $18,000 = $229,000 — an $18,000 gap the conventional figure never shows, and one that grows every time more goes into the tax-deferred bucket instead of the tax-free one.
Two more things that single number hides. Debt is 57.8% of assets, so most of the property is still the lender's; and home equity is only $130,000 of the $247,000 total, with the rest in cash and investments. Move $10,000 of cash onto the loans and net worth does not change at all — but debt-to-assets falls to 57.0%, which is real progress the headline figure cannot show.
Key terms
- Asset
- Anything with resale value: bank accounts, taxable and retirement investments, property, vehicles, business equity.
- Liability
- Anything you owe: mortgage balance, student and auto loans, home equity lines of credit, credit-card balances.
- Home equity
- A property’s current market value minus the mortgage still owed against it. Often the largest single component of a US household’s net worth.
- Liquid assets
- Assets convertible to cash quickly and without much loss — a savings account or a taxable brokerage account, as opposed to a house or a pension.