How to Calculate Your Net Worth


July 6, 2017

We all make both big and small financial decisions every day. From buying the generic version of cereal at the grocery store to splurging on the family vacation you’ve dreamed of for years, your daily activities all contribute to your financial health. Having an idea of how financially healthy you are helps you make fiscally responsible choices. That’s why everyone should know their net worth.

What is net worth? It’s a number that tells you how much you’re worth from a financial standpoint. It includes what you own, otherwise known as your assets, in addition to what you owe, otherwise known as your liabilities. Using those two numbers, you can calculate your net worth.

Calculating your net worth regularly helps give you a better idea of what you can afford to buy, whether you will get approved for a loan, and how your finances compare with your peers’. Use these tips to learn how to calculate your net worth, and see how it compares to others’ across the country and the world.

How to Determine Your Net Worth

To find your net worth, you will need to determine both your assets and your liabilities. Assets may include the following:

  • Money in your savings and checking accounts, as well as any other bank accounts
  • Cars, motorcycles, RVs, trucks and other vehicles
  • Home
  • Rental properties
  • Cash worth of insurance policies
  • Business interests
  • Personal property, which may include art, furniture, jewelry, electronics and other things you own of high value
  • Value of your investment portfolio

After you’ve totaled your assets, calculate your liabilities. Use the outstanding balance on your loans. This may include:

  • Mortgage
  • Student loans
  • Car loans
  • Credit card debt, including cards from retailers
  • Unpaid medical bills
  • Other personal loans

A Positive vs. Negative Net Worth

Once you’ve totaled your assets and your liabilities, add the liabilities, which should be a negative number, to your assets. This number is your net worth. If your assets total more than your liabilities, you have a positive net worth. If your liabilities outweigh your assets, your net worth is negative.

Why does this matter? A negative net worth does not necessarily mean you can’t pay your bills. It doesn’t consider how much money you bring in, but rather how much you have on hand, how much you have saved and how much you have invested.

Still, it could be an indicator that you should reexamine certain financial habits to ensure you are making the most fiscally responsible decisions.

Net worth remains just one aspect of your overall financial health. Perhaps the most important thing to keep in mind when it comes to your finances is that you need to stay on top of them and continue to reassess your budget, your income and your net worth regularly.

What Is Your Net Worth Compared to Other Pennsylvanians’?

After you’ve calculated your net worth, you may find yourself curious about how you stack up to others. Is your net worth above or below average? Should you be happy with your figure? Individuals have unique circumstances, and you may have a number that’s healthy for your circumstances but not others’. Keep that in mind when reviewing these comparisons.

A recent study by the Center for Rural Pennsylvania broke down net worth across the state for the most recent year available, 2015. It found that:

  • The median household net worth in PA is $104,593
  • 27.6 percent of Pennsylvanian households have a net worth below $15,000
  • 18.5 percent have a net worth above $500,000

What Is Your Net Worth Compared to Other Americans’?

Pennsylvanians stack up well compared to the rest of the country. Americans have an average net worth of $80,039, according to the most recent data from the U.S. Census Bureau, from 2013. That number fell to around $25,000 when excluding the value of homes, suggesting that much of Americans’ net worth comes from their real estate purchases.

The Census also found that the older the American, the higher their net worth. Those under 35 years old have an average net worth of less than $7,000, but that number increases to more than $202,000 for those over age 65.

Grow Your Net Worth With Smart Money Management

Your aim should be to increase your net worth and financial solvency as you grow older, and decrease the money you owe due to loans or other debt. Keeping close tabs on your property, your home’s value and how much you put in retirement accounts will help you do that.

Tabulating your net worth regularly will help you determine if you’re on the right path. Find more tips and money management resources on our WalletWorks.

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The content provided in this publication is for informational purposes only. Nothing stated is to be construed as financial or legal advice. PSECU does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs or websites. PSECU does not warrant any advice provided by third parties. PSECU does not guarantee the accuracy or completeness of the information provided by third parties. PSECU recommends that you seek the advice of a qualified financial, tax, legal or other professional if you have questions.