How To Determine Your Personal Net Worth

How To Determine Your Personal Net Worth

( – The average net worth of a household in the US is $748,000, with a median of $121,700. Understanding your own net worth can help you to evaluate the broader picture when it comes to your financial health, especially in terms of determining whether or not you have more assets than debt. This is incredibly important for those who are considering making a big investment (such as a house purchase or a new business), or even for those contemplating their next steps in planning for retirement. Here’s how to calculate that number.

The process is pretty straightforward. First, write down and list out the total value of all of your assets — any item you own that holds value. Homes, bank accounts, investments, cars, computers, jewelry, and even expensive clothing usually fall into this category.

Next, calculate your total liabilities or debts. Include money owed on credit cards, loans, mortgages, medical bills, student loans, or taxes. Subtract your liabilities from your total assets to get your net worth.

Example: If you have total ownership over a $150,000 home, a $15,000 car, and maintain a total of $5,000 in other assets (such as checking, savings, or retirement accounts), you have $170,000 in assets. If you still owe $10,000 on the car and $50,000 on your home, that means you are still $60,000 in debt. Subtract the $60,000 from the $170,000 to come up with a total net worth of $110,000.

While knowing your net worth can help you understand your financial health, it may not always paint an entirely accurate picture of your financial position. A person can have a fortune in assets but be unwilling to sell them, making them “poor” in terms of cash on hand. On the flip side, it’s possible to be cash-rich but have no other assets.

Not interested in crunching a bunch of numbers on your own? Use NerdWallet’s easy and quick net worth calculator instead.

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