What Counts Toward Net Worth: 10 Assets and 8 Debts People Forget
Your net worth is what you own minus what you owe, on one date. That is the whole formula.
The arithmetic takes a minute. What takes longer is deciding what belongs on each side, and that is where most people either flatter themselves or scare themselves.
So here are both lists, what to leave off, and one example worked from the first line to the last.
This is the checklist. If you want the full method, including how to value a business you own, it is in our step-by-step guide to calculating personal net worth.
Everything in one view is the point of the exercise. Example data.
The short version
Net worth is assets minus debts, measured on a single day.
Count things at what they are worth today, not what you paid.
List every debt at its current balance, not its monthly payment.
Income is not an asset. Neither is a credit limit or an inheritance you have not received.
Ten things that count as assets
Asset | How to value it |
|---|---|
Checking accounts | Today's balance |
Savings accounts | Today's balance |
Retirement accounts | The current statement value |
Other investments | The current market value |
Your home | A cautious estimate of what it would sell for |
Other property | A cautious estimate, the same way |
Vehicles | What you could sell them for now, not what you paid |
Business equipment you own | What it would sell for today |
Money owed to you that you expect to collect | The amount you realistically expect |
Cash value of a life insurance policy | The surrender value on the statement |
The word doing the work in that table is cautious. A home valued at the best sale on the street, or a car valued at what you paid, makes the number feel better and tell you less.
Eight debts people forget
Debt | What to write down |
|---|---|
Mortgage | The balance still owed, not the original loan |
Car loan | The balance still owed |
Credit cards | The full balance today, even if you pay it off monthly |
Student loans | The balance, including any that are deferred |
Business loans and lines of credit | What is drawn and owed |
Tax you owe and have not yet paid | Your best estimate for the year so far |
Money borrowed from family | What you intend to repay |
Buy now, pay later plans | The total still to pay across all of them |
The tax line is the one self-employed people most often leave off. If you have earned profit this year and not yet paid the tax on it, part of your bank balance already belongs to someone else.
What does not count
Your income. A salary or a good month is a flow, not something you own.
A credit limit. It is the amount you could borrow, not money you have.
An inheritance you expect. It counts when it arrives.
Household goods and clothes. Unless something would genuinely sell for a meaningful sum, leave it off.
Your business as a feeling. Count what it owns and owes. Putting a sale value on the business itself is a separate and harder question.
A worked example
What she owns | Value |
|---|---|
Checking | $4,200 |
Savings | $11,500 |
Retirement accounts | $86,000 |
Home | $310,000 |
Car | $14,000 |
Business equipment | $6,000 |
Total owned | $431,700 |
What she owes | Balance |
|---|---|
Mortgage | $198,000 |
Car loan | $9,400 |
Credit cards | $3,100 |
Business loan | $7,500 |
Total owed | $218,000 |
Net worth: $431,700 minus $218,000 is $213,700.
Notice what that number is made of. Almost three quarters of what she owns is her home, and most of what she owes is the mortgage on it. Take the house out of both sides and she owns $121,700 and owes $20,000. Neither view is wrong. They answer different questions, and it is worth knowing both.
Personal and business both belong in the picture, each clearly marked. Example data.
Is my number good?
The honest answer is that the comparison worth making is with your own number last time.
For scale, the Federal Reserve's Survey of Consumer Finances puts the median net worth of all US households at $192,900 and the average at $1,063,700. The average is pulled up by a small number of very large fortunes, which is why the median is the one to look at. Our post on net worth by age has the median for each age group.
A benchmark tells you where a crowd is. It does not tell you whether you are moving in the direction you want, and that is the question that matters.
How often to do it
Four times a year is plenty. Pick the last day of each quarter, write the two totals down, and look at the change.
One number is a photograph. Two numbers three months apart are a direction, and a direction is something you can act on.
The three mistakes that move the number most
Valuing the home at a hopeful price. It is usually the largest line, so a generous guess swings everything.
Listing payments in place of balances. A $400 car payment is not the debt. The $9,400 still owed is.
Leaving off the uncomfortable ones. A card, a loan from a parent, tax not yet paid. The number is only useful if it is complete.
Work out yours free
This is exactly what La Soglia, the free membership of the Money Mastery System, was built for. The Net Worth Tracker holds everything you own and everything you owe in one place, personal and business together, across more than 60 account types, with no bank connection and no card.
You enter the balances, it does the totals, and next quarter you can see the change instead of starting again.
Bring it to the Collective
How to value a home, a car or a small business is a good question for the discussion feed. The Money Mastery Collective is open on the free membership.
Questions we hear
Do I include my house in my net worth?
Yes. List the home as an asset at a cautious sale value, and the mortgage separately as a debt.
Is a car an asset?
Yes, at what it would sell for today. The loan on it is listed separately as a debt.
Can net worth be negative?
Yes, when debts are larger than assets. It is common early on and with student loans, and the direction matters more than the starting point.
How often should I calculate it?
Four times a year is enough. The value is in comparing one figure with the last.
References
The median and average net worth of US households are from the Federal Reserve Survey of Consumer Finances, 2022, the most recent released. The worked example is our own.
Start free with La Soglia
La Soglia is the free membership of the Money Mastery System. It gives you the Net Worth Tracker, where everything you own and everything you owe sits in one place, and the Money Mastery Collective. There is no card to enter and no bank connection.
Keep in touch
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A note on what this is
This article is educational. The Money Mastery System is an educational tool, not financial software, and nothing here is legal, tax, investment or financial advice. The example figures are illustrations, and how to value an asset depends on your own situation. For guidance on your own circumstances, please speak with a qualified professional who knows them.
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