Net Worth Calculator

What this calculator tells you

Net worth is the value of everything you own, minus everything you owe at a single point in time. It is a snapshot of your financial position, which makes it useful for tracking progress over the years and for seeing how changes in savings, debts or asset values affect your overall position.

Net worth is not the same as income or cash flow. A person can have a high income and a low net worth if spending is high or debts are large, and a person with modest income and a high net worth may have built up assets over time.

How net worth is worked out

The calculator adds up your assets, which are things with money value such as cash, savings, investments, property and vehicles. It then adds up your debts, which are amounts you owe such as mortgages, loans, credit card balances and money owed to others. Net worth equals total assets minus total debts. A negative figure means you owe more than you own.

A worked example

Suppose your assets are 250,000 in total, including a home, savings and a pension, and your debts are 120,000, including a mortgage and a car loan. Net worth is 250,000 minus 120,000, which is 130,000. If you pay down 10,000 of debt in a year, net worth rises by 10,000, even though your assets have not changed.

Valuing assets and debts

Use a realistic current value for each item. Property and vehicles are worth what they would sell for, not what you paid for them, and investments should be valued at their current price. Pension values are often shown as a projection, so use the current value of the pot. Include debts at the amount you still owe, not the original loan size, and leave out debts that will not need repaying.

Some items are hard to value, such as a business interest or personal belongings. Use a conservative estimate and note how it was made, so the figure can be compared fairly over time.

Limits of the measure

Net worth does not show how easily assets can be turned into cash. A large home equity figure can coexist with little cash to cover an emergency. It also depends heavily on market values, so a fall in house or share prices reduces net worth even if you have saved as planned. Taxes that would be due on selling assets are not deducted unless you choose to include them.

Avoiding common errors

A common error is to count an asset you cannot sell, such as a share of a business with no buyer, at its full notional value. Another is to forget debts that are not on a credit report, such as money owed to family or unpaid tax. Be thorough when listing liabilities, because omitting them overstates your position.

Using the result

Track net worth once or twice a year, using the same method each time, and look at the trend rather than a single value. Use it alongside a cash-flow measure, such as the savings rate, to see both where you stand and how quickly you are moving.

Setting goals from the figure

Once you have a net worth figure, set a target for it, such as a multiple of your annual spending or a date for reaching a set amount. Track the change each year and separate it into savings, investment growth and changes in debt. This shows which part of your plan is working, and which needs more effort.