Guide · · 2 min read
How to calculate your net worth (and why it's the number to watch)
Net worth is what you own minus what you owe. Here's how to add it up in ten minutes, what to include, what to leave out, and how often to check it.
Income tells you what comes in. Spending tells you what goes out. Net worth tells you where you actually stand. It's the one number that captures the result of every financial decision you've made, and the only one that tells you whether you're moving forward.
The formula
Net worth = everything you own − everything you owe
That's it. The work is in being honest about both sides of the line.
What counts as something you own
- Bank accounts: checking and savings, at today's balance.
- Digital wallets: Wise, Revolut, PayPal and similar.
- Cash: what's actually in your wallet or a drawer, if it's meaningful.
- Money people owe you: a loan to a friend is still your money until it's repaid.
- Investments and retirement accounts, if you want the full picture, at their current value.
What counts as something you owe
- Credit card balances (the full balance, not just the minimum payment).
- Personal loans, car loans, student loans.
- Money you've borrowed from friends or family.
Three mistakes that distort the number
- Using purchase prices instead of current values. A car is worth what it would sell for today, not what you paid.
- Forgetting small debts. The $300 you owe a friend is still a liability.
- Mixing currencies without converting. 1,000 EUR and 1,000 USD aren't the same amount. Convert everything into one currency before you add it up.
How often to check it
Monthly is enough for most people. Net worth moves slowly, and checking daily mostly adds noise. What matters is the trend over months: is the line going up, and is it going up faster than last quarter?
Comparing one period with the one before is the most useful habit. A month where net worth rose by less than usual is a prompt to look at what changed, before it becomes a pattern.
Doing it in Finance
Add each account with its current balance and currency, record loans in either direction, and the dashboard adds everything up in the currency you choose. Each metric compares the last 7, 30 or 90 days with the period before, and the net worth history builds itself from the transactions you record.