Man and woman using laptop and reviewing bills

Knowing your net worth gives you valuable insight into your current financial standing. From there you’ll know if you’re making progress on your financial goals or if you need to adjust.

What is net worth?

Net worth is simply the difference between your assets or what you own and your liabilities — what you owe. Calculating your net worth shouldn’t cause you to lose sleep. The result of your calculation is specific to your financial life. As such it’s difficult to apply an ideal number. The goal is to achieve a positive net worth — whatever the number — as long as it’s in line with your financial goals.

You aren’t competing with your friends or neighbors. Instead you’re creating a personal benchmark for your own financial life. Generally, the higher your net worth, the more resources and options you have available to handle financial challenges.

Prepare your net worth statement

Here’s how to calculate your net worth to get a big picture snapshot of your financial health.

How to calculate your net worth

1. List your assets. Estimate the value of each and add up the total. Include items such as:

  • Balance of your deposit accounts
  • Value of your investment accounts
  • Market value of your car
  • Market value of your home
  • Personal property, such as jewelry, art and furniture
  • Cash value of any insurance policies

2. List your liabilities and add up the outstanding balances. Include items such as: 

  • Mortgage
  • Car/boat loan
  • Credit card balance
  • Student loans

3. Net worth is your assets minus your liabilities.

Not a one-and-done calculation

Your net worth should be calculated periodically, not just once. Each instance becomes a snapshot of one moment in the bigger financial picture of your life. Combined, each snapshot shows a trend, which allows you to assess if your current path will help you reach your financial goals.

How to increase your net worth

If you have a higher net worth — good for you! This suggests you own more than you owe — meaning you’re heading in the right direction. A negative figure means just the opposite — you have more liabilities or you owe more than you own. This could indicate your plan needs some adjusting in order to increase your net worth.

Start by re-evaluating your debt load and consolidating debt where possible. In the end, lower monthly debt payments mean more money in your account to save or invest. Either way, your net worth trends upward.

If possible, contribute the maximum amount to 401(k) plans and individual retirement accounts (IRAs) to boost retirement savings. Check to see if your employer provides matching funds; this will help you grow your retirement savings and increase your net worth.

Call or visit a branch for help creating a plan to increase or maintain your net worth.

The advice provided is for informational purposes only. Contact a financial advisor for additional guidance. 

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