Know, track and grow your net worth

Know how your net worth is calculated and leverage these strategies that can help increase your wealth over time.

Among the key health metrics in personal finance is net worth, which offers a snapshot of where you are in your wealth-building journey. Knowing how to determine your net worth can help you mark the progress you’ve made so far and serve as motivation to keep moving in the right direction.

With personalized advice, digital tools and regular check-ins, we can help you track your net worth and identify strategies that can help you grow it over time. To get you started, here’s how to think about this measure of wealth:

What is net worth?

Your net worth offers a point-in-time view of your wealth accumulation efforts to date. It’s the value of your assets that can be converted into cash minus your liabilities. In short, it’s your personal balance sheet. To calculate your net worth, simply subtract your liabilities from the total value of your assets.

Assets – liabilities = net worth

In calculating your net worth, your assets will include any investments, retirement accounts, vehicles, jewelry, the value of your property and money you have in bank accounts. On the other side of the ledger, your liabilities will include loans, credit card balances and your mortgage.

Where you are in life often significantly impacts your net worth. Many young people, especially those with student loan debt, have negative net worth. Ideally, as you pay down debt, build equity in your home and acquire more assets, net worth will steadily grow. Eventually, as you tap into your savings and investments for retirement income, your net worth may decline.

Learn more: Personal budgeting strategies to help reach your goals

Advice spotlight

While there is no “correct” net worth for a person, the general asset-to-liability ratio can help you gauge progress. Multiply your age by your pre-tax income and divide by 10. If your net worth is around (or higher than) that number, you’re on the right track.

Age x pre-tax income / 10 = “ideal” net worth

Why your net worth is important to measure

While knowing how to determine your net worth at any given point is helpful, tracking your net worth over time is key to ensure you’re moving in the right direction.

It can:

Help you see the big picture, when assessing significant financial moves such as buying a car or a house, taking out school loans or setting a savings goal.
Be cause for celebration, showing your progress over time.
Be cause for motivation, helping to keep you incentivized to meet your financial goals.
Provide an accounting of your overall liquidity. For example, in calculating your net worth, you may find that too many of your assets are liquid or illiquid.

Learn more: How to keep your financial records organized

How to calculate and track your net worth

You can assess your current net worth by adding up the value of all your assets and then subtracting all your liabilities. One way to determine your net worth is to use our net worth calculator, which provides preset inputs for various assets and liabilities.

Net worth calculator

Determine your current net worth and project how it may change over the next 10 years.

Calculate your net worth

One common challenge when calculating net worth is assigning accurate numbers for things that may fluctuate in value, such as investments or your home. Consider a conservative approach when valuing assets to avoid creating an overly optimistic picture.

Learn more: Establishing a cash reserve: How much should you have?

How to potentially increase your net worth

Growing your net worth will take time, patience and consistent financial habits. Here are general strategies that can help increase your net worth over time:

Pay down debts. Since net worth is your assets minus your liabilities, reducing your liabilities by paying off debt can increase your net worth considerably.
Systematically save and invest. By automatically setting aside a specific amount of your income at regular intervals for saving or investing, you can prioritize and incorporate a regular wealth building exercise into your financial routine.
Build a cash reserve. The money you set aside will count as an asset and can prevent you from using debt to pay for an emergency.
Increase your retirement contributions. Contributing the maximum to your retirement plans, including 401(k) and IRAs, can help you build wealth in a tax-advantaged way. And if your employer offers a match, those contributions are an easy way to help grow your net worth.
Build wealth through home ownership: For many of Americans, their homes are one of their largest financial assets and a significant part of their net worth. By buying a home, you build equity through a monthly mortgage payment and benefit from any appreciation on the property. For good reason, home ownership is one of the most widely utilized tools for building wealth in the U.S.