What Does Net Worth Mean And How Do I Track It?

I’m sure from time to time you’ve seen news clips or magazine articles comparing public figures net worth. Donald Trump has a net worth of this…. The Kardashian family has a network of that…..

Do you know what this actually means and how people go about tracking net worth? If not, stand by because knowing your net worth even if you aren’t a billionaire is a good figure to know.


First of all, let’s clear one thing up. Your net worth has nothing to do with your worthiness in society.

As we uncover the many things that contribute to your net worth, do me a favor. I want you to promise me that regardless of the number you’ll keep your chin up and not become discouraged!

Don’t let your net worth be confused with your self worth or ability to be a badass person!


Net worth is a figure that is calculated by subtracting the sum of your liabilities from the sum of your assets. Basically, this is the total value of everything you own minus the total of all the money you owe.

Your assets include everything from cash and any cash equivalent.

Think of things like:

  • checking and savings accounts
  • money market accounts
  • physical cash
  • certificates of deposits
  • investment accounts
  • property and/or land
  • vehicles

Liabilities are the debts you owe. These can include unpaid balances on your mortgage or car, student loans, credit card debt. Think of a liability as anything you still owe money on and are currently working to pay back.

According to a report on Market Watch one 1 in 5 American households have zero or a negative net worth.

In short, don’t judge a book by the cover. You may find a person with a college degree, respectable job, and good income may still have a negative net worth.


Knowing what your net worth gives you an overall picture of your financial health. Just because a person earns 7 digits a year doesn’t mean that they actually have a high net worth.

In fact, this person could have debts all over the place making their net worth much lower than a 6 digit earner.

As you can see, you can be making $10,000 + a month but if you’re spending everything you earn, you’re still netting zero. If you end up losing your job you’re back at the drawing board with nothing to show for that big chunk of money you once had.

Instead of worrying so much about your salary, think about your net worth. What can you do to increase your net worth?

When I think of increasing net worth I think of things like investing money in things that will increase in value over time. By being mindful about reducing debts and increasing assets you will reach your financial goals much faster.


Calculating your net worth isn’t some fancy formula that only math wizards know. It’s actually really easy. You don’t even need an app to figure it out. (However, I do recommend getting one at some point to track your net worth over time).

STEP 1: Make a list of all your assets and their estimated value.

Remember we’re talking big-ticket items not the clothes in your closet.

Your assets should include:

  • Checking account
  • Savings account
  • Emergency fund account
  • Money Market account
  • CD’s
  • Real Estate (your house)- you can use Zillow to estimate the value of your home.
  • Property
  • Retirement accounts- Roth IRA, Traditional IRA, 401(k), 403(b)s, 401(a), 457s, HSA
  • Investments-Stocks, bonds, 529 Plans
  • Vehicles- Use Kelly Bluebook to get the appraised value

As you see above, I stopped listing physical items that cost less than my car.

However, I know of people who’ve inherited valuable things like rings or pieces of artwork from grandparents. If you have something that is worth a lot of money you’ll definitely want to add it to the list.

STEP 2: Add up all your assets

STEP 3: Make a list of all of your debts AKA Liabilities

Alright, here comes the not so much fun part. Your debts! The amount of money you owe people or institutions.

Your Liabilities May Include:

  • Credit card balances
  • Auto loans
  • Mortgage
  • Personal loans
  • Student loans
  • Random Debts: Snowmobile loan, ATV loan, Boat loan, motorcycle loan.

STEP 4: Add up all your debts

STEP 5: Subtract

Subtract your total debt from your total assets. The resulting number is your net worth. Yep! Just simple ole addition and subtraction is all that’s involved in calculating your net worth.

Remember….. you promised me that regardless of your number you wont become discouraged.


Ok, regardless of your net worth number your goal from here on out is to increase it. It really doesn’t matter what it is today the only thing that matters is where it’s going.  

Each and every time you decrease debt or increase your assets you are growing your net worth. Boy increasing net worth sounds pretty easy, doesn’t it?

Here are some specific things you can do to increase your net worth

1. Analyze your spending

Pull out your budget and go over it slowly and strategically. Is there anything you can reduce or get rid of?

Think of things like cable, reducing your grocery bill. We’ve even gone as fas as switching our cellphone provider to a cheaper one. Republic wireless has offered us great service at a lower price.

Now think about your insurance policies. Is it time to begin shopping around for a new carrier to reduce your rates?

2. Decrease Debt

Every time you are able to pay off debt you are increasing your net worth.

Ready? Let’s crush this debt and increase your net worth!

Do you have a mortgage? Mortgages are the most expensive thing in most people’s lives consider paying it down.  A good way to pay down your mortgage is by making bi-weekly payments.

What can you pass up doing this month to allow you to increase your payment to your credit card bill?  Remember, by continuously paying the minimum of your credit card it’ll take you forever to get ahead.

Speaking of mortgages and credit cards. Can you refinance high-interest rates to lower rates and speed up the amount of time to pay them off?

When we were struggling to pay our credit card debt I used a 0% balance transfer offer to hurry our payoff process. Transferring our balance from an 18% interest card to 0% interest for 18 months helped us to pay things down fast.

Our goal here is just to chip away at debts one at a time. If you need a good method for paying down debt I highly recommend you check out the debt snowball method.

3. Increase Income

When you’re trying to get to your ideal net worth you may have to find alternative ways to increase your income.

A good way to do this is by asking for a raise or finding a side hustle or part-time job to bring in some extra income. Need help asking for a raise? I recommend you read this.

Please remember, as explained earlier just increasing your income does not increase your net worth. You have to be smart with where you are putting your money.

Here are some good options for safe places to put your money to increase your net worth:


I know we did some quick and easy math above to figure out your net worth. But it’s a really good idea to figure out a method that’ll work for you. Figure out what you’re comfortable using on a somewhat regular basis.

You can choose to use an excel spreadsheet or a fancy net worth tracking app. Using an excel spreadsheet may sound a bit tedious but its an option. If pen and paper and excel spreadsheets aren’t your thing try an app like Personal Capital or Mint.


I use Personal Finance and absolutely love it. Personal Capital is an app that provides tools to help you manage your money. The best part about Personal Capital is it’s FREE. Click here to join!

With Personal Capital you can:

  • Access all of your debt and asset accounts in one place
  • Plan for retirement  
  • Monitor your investments
  • Uncover hidden fees
  • View, manage and categorize your expenses

Personal Capital also helps you track your money in other areas

  • Investment gains and losses
  •  Account balances and transactions  
  • Categorized spending charts
  • Upcoming bills due    
  • Projected investment fees
  • Income reports

Setting up an account with Personal Capital is super easy just follow the instructions below:

1. Go to Personal Capital and click the “Join For FREE” button in the upper right-hand corner.

2. Fill out the prompts by entering in your demographics   

3. Enter your bank and investment account information.

And cha-ching that’s it you’re done!

Side note: I know some people are reluctant to enter in important banking info into websites and apps. But don’t you worry Personal Capital uses bank-level military-grade encryption. This ensures they keep your account information protected at all times.


I want you to walk away knowing everything you need to know about your net worth. Here’s answers to the most frequently asked questions.

What? My net worth is in the negative can this be true?

Unfortunately, it can! As you saw above if you have more debts than you have assets you’re essentially underwater. Don’t worry you can still come up for some breaths you’ll be fine!

A lot of people who haven’t had much time to build up their assets may find themselves with negative net worth. For instance, many people right out of school may discover they’re in the negative. Think about it, most of them have school loans.

What should my net worth be?

Let’s start off by saying your network is not a contest so do not compare yourself to others around you. But it really depends on what kind of life you want to live…

Do you want to live with brand new cars and a house that’s too big? Or do you want to live a more minimalist life? As you can see your net worth is unique to you and your goals.

Here’s an article that gives you a list of average net worths based on age.  You can check it out and see where you stand.

How often should I calculate my net worth?

I’d recommend you check in quarterly. Don’t become too focused on checking it weekly because it will take a bit to see big changes.

On the flip side only checking your net worth annually won’t give you an idea of the progress you’re making.

If you only check your net worth once a year you could be missing something. By checking it regularly you can find things negatively affecting your net worth.

Everything You Need To Know About Figuring Out And Tracking Your Worth…

There you have it! I hope you found the information in this post helpful. If you have questions please don’t hesitate to reach out!

1 thought on “What Does Net Worth Mean And How Do I Track It?”

  1. Linda Mark


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