Short answer
Net worth is the total value of everything you own (assets) minus everything you owe (liabilities). Someone with $250,000 in assets and $180,000 in debts has a net worth of $70,000. It can be negative, and it changes every time you save, borrow, repay or your investments move.
The net worth formula
Net worth = total assets − total liabilities
Assets are things with a resale value: cash, investments, retirement accounts, property, vehicles, money others owe you. Liabilities are debts: mortgage, car loan, student loans, credit card balances, personal loans, tax owed. Values are taken at one date — net worth is a snapshot, like a photograph of your balance sheet.
What counts as an asset and a liability
| Assets (what you own) | Liabilities (what you owe) |
|---|---|
| Chequing and savings accounts, cash | Credit card balances, including ones paid in full monthly |
| Investments: stocks, ETFs, funds, bonds, crypto | Mortgage — full outstanding balance |
| Retirement accounts: 401(k), IRA, RRSP, TFSA, pension value | Car loan or lease balance |
| Home and other property, at resale value | Student loans |
| Vehicles, at resale value | Personal loans, lines of credit, buy-now-pay-later |
| Money others owe you | Taxes owed, money you owe family or friends |
What stays out: future salary, the purchase price of things you could not sell for that amount, and everyday possessions with little resale value. Including them makes the figure look better than your real position.
Three worked examples
| Graduate, 24 | Renter, 35 | Homeowner, 48 | |
|---|---|---|---|
| Cash and savings | $3,000 | $18,000 | $25,000 |
| Investments and retirement | $2,000 | $64,000 | $210,000 |
| Home and car | $6,000 | $12,000 | $520,000 |
| Total assets | $11,000 | $94,000 | $755,000 |
| Debts | $34,000 | $9,000 | $310,000 |
| Net worth | −$23,000 | $85,000 | $445,000 |
Illustrative households, not averages. The graduate's negative figure comes from student loans; it is normal at that stage and improves with every payment.
Positive, negative and the direction of travel
A positive net worth means your assets would cover all your debts with something left. A negative one means they would not. For most people the sign matters less than the direction: a net worth of −$23,000 that was −$31,000 a year ago is moving the right way, while $85,000 that was $95,000 a year ago needs a closer look. That is why it pays to track net worth over time.
Net worth and income are different things
Income is a flow — what arrives over a month or a year. Net worth is a stock — what you have accumulated at one moment. Two people on the same salary can have very different net worths depending on what they spend, save and owe. Income raises net worth only through the part you keep: savings, investments and debt repaid. A useful companion figure is your savings rate.
See your own net worth, updated as your money moves
Finman adds up accounts, investments, savings goals, property and debts in one base currency and keeps a dated history.
Track my net worth freeWhat is a typical net worth?
National surveys give a reference point. Medians are more useful than averages here, because a small number of very wealthy households pull the average far up.
- United States: median family net worth was $192,900 in 2022, while the mean was $1,063,700. Source: Federal Reserve, Changes in U.S. Family Finances from 2019 to 2022 (October 2023).
- Canada: median family net worth was $519,700 in 2023; for families whose main earner was under 35, it was $159,100. Source: Statistics Canada, Survey of Financial Security 2023.
The two surveys define families and value assets differently, so compare each figure with your own history.
“Net worth” of a person in the news, and of a company
The net worth figures published for famous people are outside estimates: a publication values the assets it can see and subtracts the debts it knows about. Your own figure can be exact because you see both sides. For a company, net worth is the same idea under another name — shareholders' equity, total assets minus total liabilities on the balance sheet.
How to work out your own
List every asset and every debt with current values, add each side and subtract. The step-by-step version, with the valuation traps, is in how to calculate net worth; the quick version is the net worth calculator. To keep the number current without a spreadsheet, a net worth tracker does the adding and stores each snapshot.
Frequently asked questions
What is net worth in simple terms?
Net worth is what would be left if you sold everything you own and paid off everything you owe. In numbers: total assets minus total liabilities.
Does net worth include my house?
Yes. The house counts as an asset at what it would sell for today, and the mortgage counts as a liability at its full outstanding balance. The difference is your home equity, which is part of your net worth.
Does net worth include retirement savings?
Yes. Pension, 401(k), IRA, RRSP and TFSA balances are assets. Some people also track net worth without retirement accounts to see the part they can reach today.
Is income part of net worth?
No. Income is money coming in over a period; net worth is a balance at one moment. Income raises net worth only to the extent that you keep some of it as savings, investments or paid-down debt.
What does a negative net worth mean?
It means you owe more than you own, which is common with student loans or a new car loan. The useful question is whether the figure is moving toward zero month by month.
What is the median net worth?
In the US, median family net worth was $192,900 in 2022 (Federal Reserve, Survey of Consumer Finances). In Canada, median family net worth was $519,700 in 2023 (Statistics Canada, Survey of Financial Security). The two surveys use different methods, so compare each figure with your own history.
Turn the definition into your own number
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