Your net worth is the difference between what you own and what you owe. It is not a measure of success or character — it is a financial metric, like a blood pressure reading for your money. A high earner with large debts may have a lower net worth than a moderate earner who has been steadily building assets for years. Tracking it regularly gives you a realistic picture of whether your financial situation is improving over time, regardless of how any given month feels.
How to calculate it
List everything you own that has monetary value: checking and savings account balances, investment and retirement account balances, the current market value of any property you own, vehicle values, and any other significant assets. Then list everything you owe: mortgage balance, student loan balance, car loan balance, credit card balances, personal loans, and any other debt. Subtract total liabilities from total assets. The result is your net worth. It can be negative, particularly when you are young or carry significant student loans. Negative is a starting point, not a permanent condition.
What to include and what to leave out
Retirement accounts should be included at their current balance, not their future projected value. Real estate should be estimated at current market value, which you can approximate using recent comparable sales in your area rather than paying for an appraisal. Vehicles are assets but depreciate quickly — a car worth $18,000 today may be worth $14,000 next year. Everyday items like furniture and clothing are technically assets but are so illiquid and hard to value accurately that most people exclude them from net worth calculations. The goal is a realistic, consistent snapshot, not a perfectly precise accounting.
Why tracking it monthly creates useful motivation
Month to month, net worth changes slowly and is rarely dramatic. But over a year, the trend is clear. A household consistently spending less than it earns and directing the difference to savings or debt payoff will see net worth rising even in months where the investment markets are flat or declining. Seeing that upward trend, even when individual months are frustrating, provides a kind of feedback that checking a bank balance cannot give — because the bank balance only shows one account on one day, while net worth shows the whole picture over time.
A simple way to track it
A shared spreadsheet with columns for each month and rows for each account works well and takes about ten minutes to update. Log into each account, record the balance, and update the totals at the bottom. The spreadsheet automatically calculates the net worth and the month-over-month change. Personal finance apps including Personal Capital (now Empower) and Copilot can connect to your accounts and calculate net worth automatically, though manual tracking in a spreadsheet works just as well and keeps your financial data entirely private.