Money Tree
By Money Tree team,
What is net worth and how do you work out yours?
Short answer: net worth is the value of everything you own minus everything you owe. To calculate it, add up your assets, such as cash, savings, investments and property, then subtract your liabilities, such as credit cards and loans. The result can be positive or negative.
Your income tells you how much comes in. Your spending tells you how much goes out. Net worth is the scoreboard that shows what's left after all of it, and whether that is growing.
What counts as an asset?
An asset is anything you own that has a money value. Common ones:
- Cash in everyday and savings accounts.
- Investments and retirement accounts.
- Your home, if you own it, at what it would realistically sell for.
- A car or other large items, at their current value, not what you paid.
Everyday possessions like clothes and furniture are usually left out. They rarely sell for much, and including them makes the number look healthier than it is.
What counts as a liability?
A liability is anything you owe. Common ones:
- Credit card balances.
- Personal and car loans.
- Study loans.
- A mortgage.
- Buy now, pay later balances and money owed to family or friends.
Use the full amount still owing, not the monthly repayment.
Step 1: Add up your assets
Go through each account and item and write down today's value. For accounts, use the current balance. For a car or home, use a rough, honest estimate. It doesn't need to be exact, just consistent each time you check.
Step 2: Add up your liabilities
List every debt and its outstanding balance. Your latest statements or your bank's app will show the figure. Don't forget a credit card you rarely use or a small loan you're nearly done with.
Step 3: Subtract liabilities from assets
Assets minus liabilities equals net worth. That's the whole formula.
A worked example
| Amount | |
|---|---|
| Everyday account | $3,000 |
| Savings account | $12,000 |
| Retirement account | $25,000 |
| Car (current value) | $15,000 |
| Total assets | $55,000 |
| Credit card balance | −$2,000 |
| Car loan | −$9,000 |
| Study loan | −$20,000 |
| Total liabilities | −$31,000 |
| Net worth | $24,000 |
Pay $1,000 off the car loan and net worth rises by $1,000. If the car also loses $1,000 in value, it stays flat. Both changes are real.
Why the trend matters more than the number
A single net worth figure is a snapshot. It can look low for perfectly ordinary reasons: you're early in your working life, you've just bought a car, or you're paying off study. Plenty of people start out negative.
What tells you more is the direction. If the number climbs month after month, your saving and debt repayments are working, even if it's still small. If it's flat or falling, that's a signal to look at where money is going. Checking once a month or once a quarter is enough for many people to spot the pattern without reacting to every small movement.
Common mistakes when working out net worth
- Counting what you paid, not what it's worth. A car bought for $30,000 a few years ago isn't worth $30,000 today.
- Forgetting small debts. An old store card or a buy now, pay later balance still counts.
- Leaving out the mortgage but counting the house. If the home is in, the loan against it is in too.
- Confusing net worth with income. A high income doesn't mean a high net worth if most of it is spent.
- Changing how you value things. If you estimate your car generously one month and cautiously the next, the trend stops meaning anything.
Tracking net worth with Money Tree
Doing this by hand means visiting every account, copying balances into a spreadsheet and repeating it each month. Money Tree shows your net worth across your connected accounts and keeps its history over time, so you can see the trend without rebuilding the sum. It connects to your bank read-only through secure bank data providers and syncs daily. It can't move money.
Because it works from connected accounts, things like a car or the contents of your home aren't part of its figure. Many people keep a note of those alongside it.
See what Money Tree does or download it on the App Store. New users get a 7-day trial of every feature.
Frequently asked questions
How do I calculate my net worth? Add up the value of everything you own, such as cash, savings, investments and property. Add up everything you owe, such as credit cards and loans. Subtract what you owe from what you own.
Is it bad to have a negative net worth? Not on its own. Many people have a negative net worth early on, often because of study or car loans. What matters more is the direction it moves over time.
How often should I check my net worth? There's no fixed rule. Many people look once a month or once a quarter, because the trend tells you more than any single day's number.
Money Tree is a personal finance tool, not financial advice. This article is general information and doesn't take your circumstances into account.