Do you know your net worth?

Net Worth

What is net worth and why should I know mine?

Net worth is a measuring stick. It’s the way to tell if you’re in debt as compared to just have debt.  You can have debt, but still have an overall net worth that is positive, but if you’re in debt your overall net worth would be negative. Net worth is a financial measure which can be calculated by taking the value of what someone owns and subtracting what someone owes.

Net worth of course like most financial tools can be much more complicated but we’re going to stick with being simple.  So, how do you calculate net worth simply?

Net worth = Assets – Liabilities

First let’s break down assets.

Assets can be defined as property owned by a person or company, regarded as having value. An asset can be many things, the most common asset someone would have is cash.  Other popular forms of assets are houses, property, vehicles and investment accounts (ie RRSP, TFSA, 401k, etc). Less common assets would be jewellery, art, RVs or other vehicles and high end luxury goods. I have a few females in my life that could probably count their shoe and purse collections as assets but I don’t recommend you doing that for your assets.

The tricky part to calculating a lot of your assets values are getting accurate values. Bank accounts are simple to get, log on and you have a number in front of your face.  For the other assets like houses, cars, and some others it gets a little tricky. There can be an emotional attachment to many of these assets, like your home for example.  This creates an emotional bias that may lead you astray when calculating your net worth. The best way to get an accurate value of your home is to ask a professional.  Some real estate agents will give you yearly updates on comparable houses/condos in your area. Or if you’re in the states, there are several websites you can find your own comparables on.  For vehicles there’s  For other assets I’d recommend calling around and seeing if you can find someone willing to appraise them for you.

Now on to the liabilities.

Liabilities would be any debts or financial obligations you have. These would include any loans, mortgages, student loans, car loans, personal loans or investment loans. Credit card debt and lines of credit are also considered liabilities.  Debt sucks, it’s best to try to avoid putting yourself in debt as it only costs you more money in the long run through interest.

Luckily, liabilities are very easy to calculate. Since a liability is money owed to someone else, there’s a really good chance that individual/company will give you regular updates.  Most people call these bills or statements; I call them a handy reminder of my growing net worth.

That’s it! Just add up all of your assets, and subtract all of your liabilities and see where you land!  Don’t get discouraged if you’re in the negatives. If that’s the case you’re probably in the first decade of your working life which is more exciting than you may realize, you are about to start an incredible journey to creating wealth and planning your financial freedom.

If you’re not sure how to organize your assets and liabilities or need another guide, I’d recommend checking out one of these to help you out:  – It’s great because you can add additional lines and there are plenty of options to remind you about some hidden wealth(yay!) you may have forgotten about or forgotten debt(booo!) which unfortunately doesn’t disappear when you forget about it. – It’s similar to the but asks you questions, if you like answering questions this is your preferred calculator right here!

Alright so I think I know how to calculate my net worth now. What’s the advantage to it?

The reason I track my net worth is to track my journey to financial freedom.  As long as my net worth is increasing I am pointed in the right direction for an eventual retirement.  If it plateaus for a few months then I look at what I did in the past few months and see what I can correct or work on to get my net worth growing again.

Whether or not you have a financial goal at this point you should still be calculating your net worth at least once a year. It may be intimidating or a little shameful for the first few years, but trust me it’s a lot better to check where your net worth is headed in private than to find out 5+ years down the road that all of your assets are worthless and you need to work for several more years instead of retiring like you thought you could do.


  • As you said, net worth is a great way to measure your progress toward your ultimate goal. I like to check in on ours every few months, just to make sure it is headed up up up!
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    • I think it’s truly one of the only ways to tell if you’re on track with your financial goals or not. There’s no down side to knowing and checking at least once a year.

  • I’m pretty compulsive about checking my net worth. I actually do it monthly just to check in on how I’m performing. I started a personal finance blog just over a year ago and post my net worth updates regularly. Never really checked my net worth or knew it until I started the blog. And you’re so right Stephen, it’s a great measuring stick. Last year I was at $260k and I ended 2016 at $380k. I’m very pleased with a 46% increase all due to debt reduction, sound investing, and my appreciating home value. I encourage everyone to follow their net worth regularly.

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