What is net worth and how do you calculate it?
Net worth is what you own minus what you owe, and it is often negative in your 20s and 30s.
New to this?
Net worth is one number that sums up your finances: everything you own (assets, like cash, savings and a car) minus everything you owe (debts, like loans and card balances). Everyone has one, and it can be below zero. Checking it each month shows if you are moving forward, even when your bank balance feels the same.
Read first
Myth
My net worth is negative, so I must be doing something wrong.
Truth
A negative number is common in your 20s and 30s, mostly from student and car loans. Priya starts at −$14,700. The direction it moves each month matters more than where it starts.
Worth memorizing
- 1
Net worth equals assets minus debts.
Add up what you own, then subtract what you owe today. Priya's $19,300 of assets minus $34,000 of debts is −$14,700.
- 2
Negative net worth is common early on.
Student loans and car loans often outweigh savings in your 20s and 30s. The direction it moves matters more.
- 3
Cars count at resale value, not price.
Priya lists her car at what it would sell for today, $9,000, not the $14,000 she paid.
Here's what I'd do: pick the 1st of every month and write down one number. Skip the judgment and watch the trend. I'd count your car at what it would sell for today, since the price you paid stopped mattering when you drove it home.
Do this today
Open a blank sheet and list every account you have, with today's balance. Total the assets, total the debts and subtract. Save the sheet and set a reminder for the same date next month.
Practice
1 of 3
You have $5,000 in savings, a car worth $8,000 and $15,000 in student loans. What is your net worth?
Assets are $5,000 + $8,000 = $13,000. $13,000 − $15,000 = −$2,000.
2 of 3
How should you value your car in a net worth statement?
Net worth uses current values. A car loses value over time, so the resale value is the honest number.
3 of 3
Which of these raises your net worth?
Paying principal lowers what you owe, which raises net worth. The other choices add debt.
Tips
List every account and debt
Include checking, savings, retirement accounts and every balance owed, even small ones like store cards, buy now pay later plans and medical payment plans.
Use current payoff balances
Pull each balance from the lender's website or latest statement. For loans, use the principal, the amount still borrowed, that you owe today, not the total of future payments.
Check once a month
Pick the same date each month and update the sheet. Daily swings in investment accounts are noise, and the monthly trend is what matters.
Leave out everyday belongings
Skip clothes, furniture and electronics unless something is valuable and you could sell it. Counting them flatters the number without making it more useful.
A worked example: a negative net worth that improves in one month
Priya, 27, is paying off student loans and a car loan. She lists every account on the first of the month.
- Assets: $1,400 + $2,100 + $6,800 + $9,000 = $19,300, using what the car would sell for today.
- Debts: $24,500 + $7,200 + $2,300 = $34,000. Net worth is $19,300 − $34,000 = −$14,700, mostly student loans.
- A month later savings are up $300, debts are down $690 and the car lost $150. That is $840 better, so net worth is −$13,860.
- Checking and savings+$3,500
- 401(k) balance+$6,800
- Car, resale value+$9,000
- Total assets=$19,300
- Student loans−$24,500
- Car loan−$7,200
- Credit card−$2,300
- Net worth today=-$14,700
- Change over one month+$840
- Net worth one month later=-$13,860
Common mistakes
Valuing things at purchase price
A car, phone or couch is worth what someone would pay for it today. Using the price you paid makes net worth look higher than it is.
Forgetting small debts
A store card, a buy now pay later plan or a medical bill on a payment plan all count. Leaving them out hides part of what you owe.
Checking it every day
Daily swings in investment accounts are noise. Once a month on the same date is enough to see the trend without getting anxious over every move.
Going deeper
Net worth is everything you own minus everything you owe. It is often negative in your 20s and 30s because of student loans and car loans, and the number that matters most is whether it goes up over time.
Assets minus liabilities
Add up the value of what you own, then subtract the balances of what you owe. The result is your net worth on that date.
Negative is common early on
Student loans, a car loan and some credit card debt can easily outweigh a young person's savings. A negative number is simply where you are starting from.
Use today's value
List a car at what it would sell for now, not what you paid. List debts at the current payoff balance, not the original loan.
The trend tells the story
Check it once a month on the same day. A number that rises month after month means your plan is working, even if it is still below zero.
What net worth measures
Net worth is a snapshot of your finances on one day. Income shows what comes in, and a budget shows where it goes. Net worth shows what all of that has added up to so far.
Two people with the same salary can have very different net worths. One may have student loans and a new car loan, while the other has savings and no debt. Net worth captures that difference in a single number.
What counts as an asset
Assets are things you own that have money value. Include cash in checking and savings, retirement accounts like a 401(k) or IRA, other investment accounts, the value of a home you own and the resale value of a car.
Leave out everyday belongings like clothes, furniture and electronics unless something is worth a lot and you could actually sell it. These items lose value fast and are hard to price, so counting them makes the number look better without being more useful.
Retirement accounts count at their current balance. Just know that money withdrawn before retirement age may owe taxes and penalties, so it is not the same as cash in the bank.
What counts as a liability
Liabilities are debts. Include credit card balances, student loans, car loans, a mortgage, personal loans, buy now pay later balances and money you owe to family if you plan to pay it back.
Use the current balance from each lender's website or latest statement. For loans, that is the principal you still owe today, not the total of all future payments.
Why it can be negative and still be fine
Many people start adult life with debt before they have had time to save. Student loans are taken out before you earn anything, and a car loan starts at full price while the car's value drops from day one. That can push net worth below zero for years.
A negative net worth describes your accounts today. It says nothing about your character, and the direction it moves matters more than where it starts. Paying down principal and adding to savings both raise the number each month, and once it crosses zero, growth tends to speed up as interest costs fall.
How to track it monthly
Make a simple sheet with one row per account and one column per month. On the same day each month, fill in each balance, total the assets, total the liabilities and subtract.
Expect some months to dip. A big car repair, a market drop in your retirement account or a holiday month can lower the number even when your habits are good. Look at the change over six or twelve months to see the real trend.
If you want a simpler check, track just two numbers: total savings and total debt. When savings rise and debt falls, net worth is going up.
Seeing the number move also helps with motivation. When a debt payoff feels slow, a sheet that shows twelve months of steady gains is proof that the small payments are working.
Questions people ask
Is a negative net worth bad?
It is common, especially with student loans or a new car loan. What matters more is whether it rises each month as you save and pay down debt.
Should I include my home in my net worth?
Yes, if you own it. List the home at a fair estimate of what it would sell for, and list the mortgage balance as a debt. The difference is your home equity.
Is net worth the same as income?
No. Income is money you earn over a period of time. Net worth is what you have left on one day after subtracting all debts from all assets.
How often should I calculate my net worth?
Once a month is a good rhythm. Some people prefer every quarter. Choose a fixed date so each check compares the same point in time.
What is a good net worth for my age?
There is no single right number, because income, cost of living, family help and student debt vary so much. A more useful goal is your own: a net worth higher than it was a year ago, and debt with high interest rates shrinking every month.
Printable worksheet with answer key, free for classrooms. Lesson plan for this unit.
Sources
Updated October 1, 2026. General education, not personalized financial, tax or legal advice. Figures are examples. Check current rates and limits before you act.
Terms on this page
Related lessons
Get your money plan by email
One step each morning: what to do, why it comes in that order, and one small thing to try. About 5 minutes. Then one short note a week. Free, unsubscribe anytime.