Net worth calculator and formula
Net worth is assets minus debts, measured on one date. On $600,000 of assets against $500,000 of debts, net worth is $100,000. It is a position, not a paycheck.
Net worth
$100,000.00
$600,000.00 owned minus $500,000.00 owed. 83.3 percent of what is owned is financed.
- Assets
- $600,000.00
- Debts
- $500,000.00
- Net worth
- $100,000.00
Cash, accounts, a home at what it would sell for, a car at trade-in. Today's prices, not what you paid.
Mortgage payoff, student loans, car finance, card balances. Today's balances, not the payments still to come.
The formula
is everything owned at today's prices. is everything owed at today's payoff balances. The difference can be negative.
One subtraction, on one date
Count what a willing buyer would pay today, not what you paid. Subtract the balances that would clear the debts today, not the sum of payments still to come. On $600,000 of assets against $500,000 of debts, the remainder is $100,000.
That remainder is a stock: a photograph of a position. Income is a flow. A large paycheck raises net worth only through the part that is not spent. Two people paid the same for a career can finish nowhere near each other.
The household version of this line is the same residual a company calls equity on its balance sheet. There is no third column to act on. Every change in net worth is a change in what is owned or in what is owed. What net worth means is the long walk through which assets to count.
The same \$100,000 can hide a very different sheet
A second household owns $150,000 against $50,000 of debt. Net worth is again $100,000. Debt as a share of assets is 33.3 percent, against 83.3 percent for the first household.
A 10 percent fall in asset values does not move the debt. The first sheet falls from $100,000 to $40,000. The second falls from $100,000 to $85,000. One reading cannot tell these two apart. The leverage ratio calculator is the page that makes that split its whole job.
A negative figure is arithmetic
Student debt of $45,000 against $20,000 of assets leaves net worth at $-25,000. That is the usual starting point after borrowing to study or to buy a car. The loan lands at the start. The earnings it was meant to buy arrive over years.
The sign is not a verdict. The slope is. A figure rising every quarter is working even while it is still below zero. The cases that do call for a closer look are high-rate debt that is still growing, a line that has been flat for years, and payments that crowd out saving, which is the ratio the debt-to-income calculator puts a number on.
What this page is not doing
It is not a recommendation about what net worth a person should have. $100,000 on the teaching sheet is $600,000 minus $500,000, nothing more. It does not capitalise a future salary or an expected inheritance, and it does not turn a defined-benefit pension into a lump sum.
Count a home at what comparable homes nearby sold for, and the mortgage at its payoff balance. Then keep a second line that drops both, because a home you live in cannot be spent without buying or renting another one. This is educational material, not financial advice.
Worked examples
\$600,000 against \$500,000
A household owns $600,000 of assets against $500,000 of debts. What is net worth, and what share of the assets is financed?
- Net worth is assets minus debts: , so $100,000.
- Debt as a share of assets: , which is 83.33 percent.
Net worth is $100,000. 83.33 percent of what is owned is financed.
The same net worth on a smaller, cleaner sheet
A second household owns $150,000 against $50,000 of debt. What is net worth?
- $150,000 minus $50,000 is $100,000, the same remainder as the first household.
- Debt as a share of assets: , which is 33.33 percent.
Net worth is $100,000, with 33.33 percent of the assets financed.
A negative starting point
Assets are $20,000. Debts are $45,000. What is net worth?
- $20,000 minus $45,000 is $-25,000.
- The debts are larger than the assets, so the residual is negative. That is a statement about timing, not a score.
Net worth is $-25,000.
A 10 percent fall on the borrowed sheet
Start from $600,000 of assets against $500,000 of debts. Assets fall 10 percent. Debt does not move. What is net worth after the fall?
- Assets after the fall: , so $540,000.
- Debt stays at $500,000.
- Net worth: , so $40,000, down from $100,000.
Net worth falls to $40,000. A 10 percent fall in assets wiped out 60 percent of the equity.
The same 10 percent fall on the cleaner sheet
Start from $150,000 of assets against $50,000 of debts. Assets fall 10 percent. What is net worth after the fall?
- Assets after the fall: , so $135,000.
- Debt stays at $50,000.
- Net worth: , so $85,000, down from $100,000.
Net worth falls to $85,000. The same 10 percent price fall took 15 percent of the equity.
The mistake that costs the most
Counting assets at what they cost, or subtracting the sum of payments still to come instead of the payoff balance.
A car bought last year is not worth the invoice. A mortgage's remaining payments add up to more than the balance, and the excess is interest that has not been charged yet. Subtracting the payment schedule counts money you have not borrowed.
On the first sheet, using the wrong column on either side moves the $100,000 by tens of thousands without anything real having changed.
Common questions
Should a home go on the asset side?
Yes, at what comparable homes nearby recently sold for, with the mortgage on the other side at its payoff balance. Then keep a second figure that drops both, often called liquid or investable net worth, because a home you live in cannot be spent without replacing it.
Is a negative net worth bad?
Not by itself. Borrowing to study or to buy a car lands the debt at the start and the earnings later, so the sign is ordinary arithmetic. Watch the slope, the rate on the debt, and whether the payments leave anything to save.
Why is this not the same as a bank balance?
A bank balance is one asset. Net worth is every asset minus every debt. A month where cash fell but a mortgage fell further can still be a rise in net worth.
Keep reading
This page is educational material, not financial advice. The figures come from the formula shown and assume the inputs you enter hold for the whole term. Your own rate, fees, taxes and timing will differ, so treat the output as arithmetic to check a decision against, not as a recommendation.