How to Calculate Net Worth (Assets, Liabilities & Common Mistakes)
The exact formula for net worth, what actually counts as an asset or liability, and the most common mistakes people make calculating it.
Net worth is one of the simplest formulas in personal finance — assets − liabilities — but small mistakes in what counts as each one can meaningfully skew the result.
What counts as an asset
- Cash in checking and savings accounts
- Investment and brokerage account balances, at current value
- Retirement accounts (401(k), IRA), at current value
- Real estate, at current market value — not purchase price
- Vehicles, at current resale value — not purchase price
What counts as a liability
- Mortgage balance remaining
- Auto loan balance remaining
- Student loan balance remaining
- Credit card balances
- Any other loan or debt balance
The mistake: using purchase price instead of current value
A home bought for $250,000 that's now worth $350,000 should count as a $350,000 asset, not $250,000 — using the original price understates net worth for appreciating assets and overstates it for depreciating ones like most vehicles.
The mistake: skipping small debts
A few hundred dollars on a credit card feels too small to bother entering, but liabilities add up the same way assets do — leaving out several small debts can shift the total by a meaningful amount.
The Net Worth Calculator organizes both sides by category so nothing gets missed, and shows the breakdown alongside the total.