Income Is Not Wealth
A doctor earning $300,000/year with $400,000 in student loans and a $500,000 mortgage has a lower net worth than a teacher earning $50,000 with a paid-off home and $200,000 in savings. Net worth is what you actually own — the single most important number in personal finance.
The Formula
Assets - Liabilities = Net Worth
Assets: Savings, investments, retirement accounts (401k, IRA), real estate market value, vehicles current value, business equity.
Liabilities: Mortgage, student loans, car loans, credit card debt, personal loans, medical debt.
Calculate Yours in 5 Minutes
Example: Assets: Savings $8,000 + 401k $45,000 + Roth IRA $12,000 + Car $15,000 + Home $280,000 = $360,000. Liabilities: Mortgage $220,000 + Student loans $35,000 + Car loan $10,000 + Credit cards $3,000 = $268,000. Net Worth: $92,000.
Benchmarks by Age
By 30: 1x annual salary. By 40: 3x salary. By 50: 6x salary. By 60: 8x salary. By 65: 10x salary.
Negative Net Worth?
Normal in your 20s-30s with student loans. Only a problem if it is not improving year over year.
How to Grow It
Increase assets: Save more, invest consistently, max retirement contributions. Decrease liabilities: Pay off high-interest debt, make extra mortgage payments, avoid new debt. Track monthly: What gets measured gets managed.
FinanceGuide has a built-in net worth tracker — add assets and liabilities, see visual breakdown, get AI tips based on your debt-to-asset ratio. Free forever.