What Is Your Net Worth? (2024)



Net Worth

9 Min Read | Sep 6, 2023

What Is Your Net Worth? (1)

By Ramsey

What Is Your Net Worth? (2)

What Is Your Net Worth? (3)

By Ramsey

All of us get a little lost from time to time. Sometimes we just need a landmark to remind us where we are so we can get to where we want to go. When it comes to your money, your net worth is one of the best ways to see where you stand financially.That number essentially says, "You are here," and it can help you get back on track with wealth building.

So, do you knowyournet worth?

Figuring out your net worth isn’t rocket science—it’s a simple formula! Once you have all the information you need, running the numbers takes almost no time.

What Is Your Net Worth?

Your net worth is what youownminus what youowe. It’s the total value of all your assets—including your house, cars, investments and cash—minus your liabilities (things like credit card debt, student loans, and what you still owe on your mortgage).

We just made it easier for you to find that number withourNet Worth Calculator. Just answer a few simple questions, and you’ll find out your net worth in five minutes—that’s less time than it takes to drink your morning coffee!

Figuring Out Your Net Worth: What Are Assets and Liabilities?

You can’t calculate your net worth until you know exactly what counts as an asset and what’s a liability. So let’s clearly define what to include in each column before you start crunching the numbers:


There are two types of assets:liquidandilliquid. A liquid asset is basically cash that’s easy to get to—like money in a money market account. An illiquid asset, on the other hand, can’t be converted to cash quickly. That would be something like a piece of land or a car you’d have to sell to turn into cash.

Both types of assets are part of your net-worth equation and can include:

  • Cash: savings and checking accounts
  • Retirement accounts and other investments: 401(k), 403(b) and IRAs
  • Real estate: the current value of your house and rental properties
  • Vehicles: cars, trucks and boats
  • Contents of your home: jewelry, art, collector’s items, etc.


Here comes the not-so-fun part: adding up all your liabilities. Liabilities are all the debts and outstanding payments you still have lying around. Basically, it’s the stuff you owe to someone else. Things like:

  • Credit cards
  • Student loans
  • Mortgages
  • Car loans
  • Medical bills

Of course, it’s best if your liabilities equalzero—which means you don’t owe anything to anyone. But if that’s not the case (yet), get them all down on paper and use the debt snowball method to pay off your debts as quickly as possible. The lower your liabilities, the higher your net worth will be!

How to Calculate Your Net Worth

Meet Joe. Joe wakes up one day and realizes he’s completely lost financially. He’s notexactly struggling to pay his bills, but deep down inside he knows he could be doing a lot better with his money. First, he needs to figure out where he is by calculating his net worth.

He can do that in three easy steps.

Step 1: Add Up Your Assets (What You Own)

Again, your assets include the stuff you own that has monetary value—everything from your 401(k) account and money in savings to the car sitting in your driveway.

So to get things started, Joe makes a list of his assets. Remember, this iswhat he owns:

  • Home valued at$210,000
  • 401(k) with$60,000
  • Car worth$15,000
  • Savings account balance of$7,000
  • Checking account balance of$2,000

Add it all up and Joe has$294,000in total assets.

Step 2: Add Up Your Liabilities (What You Owe)

Unfortunately, Joe still has some debt lying around. He took out a mortgage (which is okay as long as it’s a 15-year fixed-rate loan) and has some leftover medical bills lying around. But he’s also done some “stupid” with money (haven’t we all?) and piled up some credit card debt and car loans over the years.

Find outyour net worth with this free calculator!

Here’swhat he owes:

  • Credit card debt totaling$12,000
  • Student loan debt of$35,000
  • Mortgage balance of$175,000
  • Car loan of$10,000
  • Medical bills equaling$1,000

That list is painful to look at. Joe’s liabilities add up to$233,000.

Now Joe’s ready for the final step.

Step 3: Subtract Your Liabilities From Your Assets

Now all Joe has to do is subtract using this formula:

Total Assets
-Total Liabilities
= Net Worth

So Joe’s total net worth is$61,000:

$294,000 (Assets)
-$233,000 (Liabilities)
= $61,000 (Net Worth)

Why You Need to Know Your Net Worth

Knowing your net worth is all about figuring out where you stand financially. And that’s a good start, but you can’t stop there! The whole point of knowing your net worth is to help you start working toward your financial goals. Here’s how.

1. Your Net Worth Shows Where You Are

Are you saving enough for retirement? Do you have money in your savings account to cover an emergency? What debts do you need to tackle? Your net worth can help you answer these questions. It gives you a clear picture of your current situation.

You may not like where you stand, and that’s okay. The game’s not over yet! If you’re lagging behind in your wealth building, you can still turn things around. You’re never out of the game unless you quit. Don’t quit—push forward. Stay focused, keep your eye on the next goal in front of you, and find ways to make progress.

2. Your Net Worth Shows What Needs to Be Fixed

Ideally, you want your debts to equal a big, fat zero. But if you do have debt, finding your net worth forces you to see what you’re up against. You can’t fix a problem you haven’t identified.

To say goodbye to debt, use thedebt snowball method. List your debts from smallest to largest and tackle them as quickly as possible. Getting rid of your debt won’t just free up your income—it’ll also raise your net worth!

You might need to ditch the truck in the driveway. You might need to sell so much stuff the kids think they’re next. Do whatever it takes to get debt out of your life!

If you’ve gotten rid of all your debt except for your mortgage, you’re doing an awesome job. But don’t take your foot off the gas now. Can you make a few extra mortgage payments each year to pay off your house even faster? Imagine how much you could invest for the future with no debt and no more house payments!

3. Your Net Worth Shows How Far You Need to Go

We say that building wealth is more like a marathon than a sprint, and if that’s the case then you need to know where the finish line is! If your net worth shows you where you are in the race, then how much you need to retire represents how much farther you need to go.

The good news is we have a free tool that will help you figure out exactlyhow much money you need to retireand how much you need to invest each month to get there. You can even play with the numbers here and there to see what would happen if you saved more or spent less. That number will be different for everyone, but it’s important to have a goal to run toward so you’re not running around aimlessly!

If you’re ahead of the game, keep doing what you’re doing and build on the momentum you already have. If you’re behind, it’s time to get serious. No matter where you are, it’s never too late to build wealth and reach your financial goals!

Misconceptions About Net Worth

Now that you know what your net worth is, let’s talk about what itisn’t.

First of all, your net worth is not just the stuff you have.You could have a million dollars in cash and investments, but if you also have a million dollars tied up in mortgages, credit card debt and student loans, you’re not a millionaire—you’rebroke!

And second, yournet worth isnotyour income! Just because someone has a high income doesn’t mean they have a high net worth.There’s a myth in our culture that says you have to earn a large income to build wealth. That myth is about as real as a three-dollar bill. A six-figure salary might help, but it won’t lead to a high net worth if you’re not doing the right things with your money.

Ramsey Solutions completedthe largest, most comprehensive research study of millionairesin history.We talked to more than 10,000 millionaires—folks whose net worth is at least $1 million—to find out what a real millionaire looks like.What we found might surprise you.

Here’s a hint: It doesn’t matter what your income is, what your career is, or what kind of degree you have—anyonecan become a millionaire over time.

In his bestselling book,Baby Steps Millionaires, Dave shares the stories of real people who had average incomes but still became millionaires because of their actions and habits—the same actions and habits that can make you a millionaire too!

Take the Next Step With a Financial Advisor

Knowing your net worth is important, but you can’t stop there. The steps you take aftercalculating your net worthare just as important. A financial advisor can help you make a plan for your investments so you feel confident about your retirement.

If you need help finding an advisor, check outSmartVestor.You’ll be connected with investment professionals in your area who are ready to help you work toward your retirement goals.

Find a SmartVestor Pro today!

Make an Investment Plan With a Pro

SmartVestor shows you up to five investing professionals in your area for free. No commitments, no hidden fees.

Find Your Pros

This article provides generalguidelines about investingtopics. Your situation may beunique. If you havequestions, connect with aSmartVestorPro.RamseySolutions is a paid, non-clientpromoter ofparticipating Pros.

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About the author


Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

More Articles From Ramsey
What Is Your Net Worth? (2024)


What Is Your Net Worth? ›

Your net worth is the value of all of your assets, minus the total of all of your liabilities. Put another way, it is what you own minus what you owe. If you owe more than you own, you have a negative net worth. If you own more than you owe you will have a positive net worth.

How do I figure out my net worth? ›

Start with what you own: cash, retirement accounts, investment accounts, cars, real estate and anything else that you could sell for cash. Then subtract what you owe: credit card debt, student loans, mortgages, auto loans and anything else you owe money on. Then boom—you've got your net worth.

What is a person's net worth? ›

Your net worth is your assets minus your liabilities. It's what you have left over after you pay all your liabilities. Net worth is a better measure of someone's financial stability than income alone. A person's income could be disrupted by job loss or reduction in work hours.

What should my net worth be at 30? ›

The net worth you should be aiming for in your 30s is between $25,000 and $100,000, according to Crissi Cole, founder and CEO of Penny Finance.

What is your net worth by age? ›

Median net worth by age
AgeMedian net worth
Under 35$13,900
2 more rows
Feb 23, 2024

What is a good net worth at 40? ›

By the time you reach age 40, prevailing wisdom says you should have a net worth equal to about twice your annual salary. Hopefully, you climbed the salary ladder a bit in your 30s, too. If you're making $80,000 annually, for example, your goal should be to have a net worth of $160,000 at age 40.

What should my net worth be at 35? ›

One common benchmark is to have two times your annual salary in net worth by age 35. So, for example, say that you earn the U.S. median income of $74,500. This means that you will want to have $740,500 saved up by age 67. To reach this goal, at age 35 you may want to have about $149,000 in savings.

What should my net worth be at 25? ›

The Ideal Number
AgeIncomeNet Worth
1 more row

What is the average American net worth? ›

Key Takeaways. Net worth is the difference between the values of your assets and liabilities. The average American net worth is $1,063,700, as of 2022. Net worth averages increase with age from $183,500 for those 35 and under to $1,794,600 for those 65 to 74.

What net worth is considered rich? ›

While having a net worth of about $2.2 million is seen as the benchmark for being rich in America, it's essential to remember that wealth is a subjective concept. Healthy financial habits and personal perspectives on money are crucial in defining and achieving wealth.

Is 300k saved by 30 good? ›

In other words, if you can save up $300k by age 30, you can feel very confident that you'll have a secure “traditional” retirement by age 65 or 66, without having to save another dime.

Where should I be financially at 35? ›

Overall, the rule of thumb is to judge by your salary. Typically, by the time you enter retirement you want to have 10 times your annual salary saved up in your retirement fund. One common benchmark is to have two times your annual salary in net worth by age 35.

Is 401k included in net worth? ›

Yes. The value of your 401(k) account is a part of your net worth and should be included in your net worth. Like anything else of financial value, the vested balance of your 401(k) account — or any retirement account, for that matter — is considered an asset.

What is considered upper class? ›

Middle class: Those in the 40th to 60th percentile of household income, ranging from $55,001 to $89,744. Upper middle class: Households in the 60th to 80th percentile, with incomes between $89,745 and $149,131. Upper class: The top 20% of earners, with household incomes of $149,132 or more.

Does net worth include home? ›

Your net worth is what you own minus what you owe. It's the total value of all your assets—including your house, cars, investments and cash—minus your liabilities (things like credit card debt, student loans, and what you still owe on your mortgage).

What is considered upper middle class? ›

One common way to classify the upper middle class is based on income. The upper middle class is often defined as the top 15% to 20% of earners. According to the Social Security Administration's 2022 wage data, the average upper-middle-class income was roughly between $80,000 and $100,000.

Where does my net worth rank by age? ›

The average net worth of someone younger than 35 years old is $183,500, as of 2022. From there, average net worth steadily rises within each age bracket. Between 35 to 44, the average net worth is $549,600, while between 45 and 54, that number increases to $975,800.

Do you include house in net worth? ›

However, one measure that many overlook is net worth. Your net worth represents how much wealth you have, measured by assets like a house, cars, 401(k), jewelry or cash in the bank, minus the debt obligations you have, or what you owe.

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