Net Worth Calculator Formula
Understand the math behind the net worth calculator. Each variable explained with a worked example.
Formulas Used
Net Worth
net_worth = total_assets - total_liabilitiesTotal Assets
total_assets_out = total_assetsTotal Liabilities
total_liabilities_out = total_liabilitiesVariables
| Variable | Description | Default |
|---|---|---|
cash | Cash & Savings(USD) | 15000 |
investments | Investments (401k, stocks, etc.)(USD) | 50000 |
property | Real Estate Value(USD) | 250000 |
other_assets | Other Assets (vehicles, etc.)(USD) | 20000 |
mortgage_debt | Mortgage Balance(USD) | 180000 |
other_debt | Other Debts (loans, credit cards)(USD) | 15000 |
total_assets | Derived value= cash + investments + property + other_assets | calculated |
total_liabilities | Derived value= mortgage_debt + other_debt | calculated |
How It Works
Net Worth Formula
Net Worth = Total Assets - Total Liabilities
Assets include everything you own (cash, investments, property). Liabilities include everything you owe (mortgage, loans, credit cards).
Worked Example
Calculating net worth with typical middle-class finances.
- 01Total assets = $15,000 + $50,000 + $250,000 + $20,000 = $335,000
- 02Total liabilities = $180,000 + $15,000 = $195,000
- 03Net worth = $335,000 - $195,000 = $140,000
Frequently Asked Questions
What is average net worth by age?
Median net worth by age: Under 35: ~$39,000, 35-44: ~$135,000, 45-54: ~$247,000, 55-64: ~$364,000, 65-74: ~$410,000.
What should be included in net worth?
Assets include cash, checking and savings accounts, retirement accounts (401k, IRA), brokerage accounts, real estate market value, vehicles, and valuable personal property. Liabilities include mortgages, student loans, auto loans, credit card balances, and any other money you owe.
Is it normal to have a negative net worth?
Yes, especially for young adults with student loans or recent homebuyers with large mortgages. A negative net worth simply means your debts exceed your assets. The key metric is the trend: as long as your net worth is increasing over time, you are moving in the right direction.
Learn More
Guide
How to Budget Using the 50/30/20 Rule
Learn how to budget your income using the 50/30/20 rule. Understand needs vs. wants, how to allocate savings, and how to adapt this framework to your financial situation.
Ready to run the numbers?
Open Net Worth Calculator