Net worth is the simplest number in personal finance and the easiest one to compute badly. The arithmetic is one line — everything you own, minus everything you owe. The value comes from being consistent about what goes into each side and when it was measured.
The formula
Take every account and manually tracked asset, and add up what each is worth today. Then add up every balance you owe — credit cards, student loans, auto loans, mortgages. Subtract the second number from the first.
That is it. A negative result is not a failure state; it is the normal starting point for anyone who financed an education or a house recently, and it is the number that tells you whether the last twelve months moved you forward.
What counts as an asset
Anything you could convert to cash, valued at what you could realistically get for it:
- Cash in checking and savings accounts, at the balance the bank reports.
- Investment and retirement accounts, at their current market value.
- Property and vehicles, at a defensible estimate rather than what you paid.
- Anything else material enough to change the total — a business stake, a valuable collection.
Small possessions are usually left out. If listing something would take an afternoon and move net worth by less than a rounding error, it is noise.
What counts as a liability
Every balance you currently owe, at its payoff amount rather than its original amount. A mortgage counts at the remaining principal, not the purchase price. A credit card counts at the statement balance, including any spending you intend to pay off this month — you owe it today either way.
Future obligations that are not yet debts, like next year's rent, do not count. They will show up in your budget, not in net worth.
How NetWorthy computes it
NetWorthy stores every account balance as a dated snapshot rather than a single current value. A net worth point for a given date is the sum of the most recent snapshot for each account as of that date, which is what makes the history chart honest — a point in March uses March's balances, not today's re-projected backward.
Two details fall out of that design:
- Liabilities are stored signed. A credit card or loan balance is negative, so the total is a plain sum rather than a subtraction someone could forget to perform. Each net worth point still reports the asset and liability subtotals separately.
- Multi-currency accounts are converted before rolling up. Every balance is expressed in your chosen display currency using a stored exchange rate. If no rate is available for an account on that date, the account is excluded from that point and named explicitly, rather than silently counted as zero.
Balances are held as whole minor units — cents, not fractional dollars — so repeated conversion and summing never accumulates rounding drift.
Reading the number over time
A single net worth figure tells you very little. The slope tells you almost everything. Two questions are worth asking of the chart:
- Is the trend up over a year? Month to month, a market dip or a large planned purchase can swamp everything else. A twelve-month view smooths that out.
- Which side is moving? Rising net worth driven by falling debt is a different situation than rising net worth driven by an appreciating house you have no intention of selling. The asset/liability split on each point is what separates those two stories.
Update balances on a fixed cadence — monthly is plenty — so consecutive points are comparable. Recomputing only when things look good produces a chart that flatters and informs nothing.
This guide is educational and general in nature. It is not personalized financial advice.