1. Calculating Your Net Worth: Introduction
  2. Calculating Your Net Worth: Important Terms
  3. Calculating Your Net Worth: Why Net Worth Is Important
  4. Calculating Your Net Worth: Making Accurate Estimates
  5. Calculating Your Net Worth: Calculating Your Net Worth
  6. Calculating Your Net Worth: What Your Net Worth Means
  7. Calculating Your Net Worth: Building Your Net Worth
  8. Calculating Your Net Worth: Conclusion

To calculate your net worth, start by adding up all your assets and debts. Next, subtract your total debts from your total assets. That’s it. The difference is your net worth – whether it’s a positive or negative number.

Sounds easy enough, but knowing what counts as assets and debts can get tricky. Understanding a few key terms can make it easier to make the most accurate calculation:

Cash and Cash Equivalents

Cash and anything of value that can be easily converted into cash, such as bank accounts, savings bonds, CDs and the cash value of life insurance.

Invested Assets

Items purchased with the hope they will generate income and/or appreciate in the future. Examples include mutual funds, stocks, bonds, real estate trusts, retirement savings accounts (e.g., annuities, 401(k)s and IRAs) and business ownership interests.

Net Worth

The value you get when you subtract your total debts from your total assets. Values above $0 represent a positive net worth, while values below $0 denote a negative net worth. Also called wealth.

Personal Property

Everything you own that’s not real property. A key characteristic of personal property is that it’s movable, as opposed to a house and land, which are fixed in place. Examples include antiques, coins and collectibles; cars, trucks and boats; home furnishings and jewelry.

Real Property

Land and any structure that is permanently attached to it, such as houses, barns and detached garages. Also called real estate. Your primary home and vacation home both count as real property. 

Secured Debt

Any debt that is guaranteed by an asset or lien pledged as collateral. Your mortgage is a secured debt because the house serves as collateral for the loan.

Unsecured Debt

Any debt that is not guaranteed with collateral, such as credit card debt, medical bills, utility bills and student loans. (For more, see What is the Difference Between Secured and Unsecured Debt?)


Calculating Your Net Worth: Why Net Worth Is Important
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