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John SchmidtEditor
John Schmidt is the Assistant Assigning Editor for investing and retirement. Before joining Forbes Advisor, John was a senior writer at Acorns and editor at market research group Corporate Insight. His work has appeared in CNBC + Acorns’s Grow, MarketWatch and The Financial Diet.
John SchmidtEditor
John Schmidt is the Assistant Assigning Editor for investing and retirement. Before joining Forbes Advisor, John was a senior writer at Acorns and editor at market research group Corporate Insight. His work has appeared in CNBC + Acorns’s Grow, MarketWatch and The Financial Diet.
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Michael Adamseditor
Michael Adams is lead editor, investing at Forbes Advisor. He's researched, written about and practiced investing for nearly two decades. As a writer, Michael has covered everything from stocks to cryptocurrency and ETFs for many of the world's major financial publications, including Kiplinger, U.S. News and World Report, The Motley Fool and more. Michael holds a master’s degree in philosophy from The New School for Social Research and an additional master's degree in Asian classics from St. John’s College.
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Michael Adamseditor
Michael Adams is lead editor, investing at Forbes Advisor. He's researched, written about and practiced investing for nearly two decades. As a writer, Michael has covered everything from stocks to cryptocurrency and ETFs for many of the world's major financial publications, including Kiplinger, U.S. News and World Report, The Motley Fool and more. Michael holds a master’s degree in philosophy from The New School for Social Research and an additional master's degree in Asian classics from St. John’s College.
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Updated: Jun 14, 2023, 4:50pm
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
Your net worth is the value of your assets minus your liabilities, a.k.a. everything you own minus everything you owe. Getting a handle on your net worth is like giving yourself a financial report card. When you count up all of your assets and liabilities, you can understand what’s working in your financial life and fix what’s not.
Net Worth Calculator
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Information and interactive calculators are made available to you only as self-help tools for your independent use and are not intended to provide investment or tax advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circ*mstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.
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How to Use the Net Worth Calculator
To get the most out of Forbes Advisor’s net worth calculator, we recommend that you input data that accurately reflects the value of your assets and liabilities.
Understanding Your Assets
To get an accurate read on your net worth using this calculator, you need a good idea of the value of your major assets.
Assets are nothing more than possessions that you could exchange for cash. Stocks, bonds and other investments are assets, but so are things like your home, your car and even the money in your checking account.
Some assets are more liquid than others, meaning you could sell them more rapidly at a price that reflects their current value. Cash, for instance, is the most liquid asset. But other assets are less liquid, which means it would take time and effort to sell them, and you might not get exactly what you thought they were worth.
For each asset type in our calculator, enter an estimate of what you believe the value of the asset would be if you sold it today. Don’t worry about how much outstanding debt you might owe on something like a car loan or a mortgage. We’ll cover those in the “Your liabilities” section.
Annual Asset Growth Rate
The annual rate of growth in the value of your assets can be very tricky to get right. Our calculator lets you tabulate the value of four different types of assets: real estate, personal property, investments and cash.
Each of these would probably earn a very different annual rate of return, making it challenging to settle on the right overall annual growth rate. This calculator defaults to a growth rate of 7% to reflect somewhat conservative returns for stock-heavy investments and real estate. You may wish to lower this even more if you have substantial holdings in cash or personal property with low or no rates of return.
Understanding Your Liabilities
Liabilities are outstanding financial debts that you owe, or the negative side of your personal balance sheet. In our calculator, you’ll simply enter the amount outstanding on each variety of liability you owe.
Over time, some liabilities slowly transform into assets. That’s what happens as you pay off your mortgage and earn equity in your home. In other cases, paying off a liability simply means you have no further obligation to the entity that lent you money, like working down your credit card balance.
Annual Liability Growth Rate
The annual growth rate of your liabilities could be as challenging to determine as the growth rate of your assets.
Some liabilities, like a car loan or a home loan, have set terms and rates of interest that you’ve already agreed to. Other liabilities, like student loans and credit card debt, are more open-ended. If you keep adding more to your balance, or make only minimal regular payments, your liabilities may continue to grow.
If you have a mortgage and a car loan and are paying off each on a regular basis (per the terms of your loan agreement), the growth rate of your liabilities should be zero. If you have a credit card balance that you’re not adding to, and you’re paying it off every month, your liability growth rate should also be zero.
But if you have student loans or credit card debt that you’re not paying down regularly, think about the interest rates and balances you hold in order to enter a rough estimate of what your liability growth rate might look like.
What Is Net Worth?
Net worth is the sum of all your assets and liabilities at one moment in time.
Positive net worth means that the value of the assets you own is higher than the liabilities you owe. Negative net worth is when the amount you owe in liabilities exceeds the value of your assets.
How To Calculate Net Worth
To calculate net worth, start with a list of everything you own, including stocks, bonds, real estate, savings and other assets. Next, calculate everything you owe. Be sure to include your mortgage, car loans, credit card debt and any student loans you may have accrued.
Once you have compiled these assets and liabilities, subtract the total value of everything you owe from everything you own. This figure will give you your net worth.
How To Increase Net Worth
There are many ways to increase your net worth. One is by purchasing assets, such as stocks or real estate, that may increase in value. Another way is by decreasing your debt.
With the first option, you are increasing your assets, while with the second option, you are decreasing your liabilities.
Other ways to increase your net worth are by:
- Saving more
- Cutting down your spending
- Increasing sources of revenue
However you choose to increase your net worth, it will require a consistent effort to maintain the progress you make. You will either have to make sure you do not take on more debt than you earn, or else you will need to make sure your income grows while your debts remain the same.
Net Worth Calculator FAQs
What is the average net worth of Americans?
The average net worth of all American families was $746,820, as of 2019, according to the Federal Reserve. If this amount seems somewhat disconnected from your financial reality, that’s because average measures of things like net worth can be distorted by a small number of people with gigantic personal fortunes. A median measure is more realistic. The Fed found that the median net worth of all Americans in 2019 was $121,760.
Why is net worth important?
Net worth is important because it gives you a sense of the health of your personal finances. If your assets outweigh your liabilities, you’re probably doing well financially. But if your liabilities outweigh your assets, you should work on reducing debt.
The fact that net worth doesn’t depend so much on the size of your income but more on how you use it also makes it a helpful tool for comparing people’s financial states.
You might believe that a person earning a high salary is better off financially than someone who makes a relatively modest one. But the better comparison would be each person’s net worth. After all, a high salaried individual might have greater debts that actually gave them a lesser net worth than someone with less means who uses what they have more judiciously.
Who has the highest net worth?
As of June 2023, the wealthiest person in the world is Elon Musk who resides in the United States and has a net worth of $234 billion.
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Editor
John Schmidt is the Assistant Assigning Editor for investing and retirement. Before joining Forbes Advisor, John was a senior writer at Acorns and editor at market research group Corporate Insight. His work has appeared in CNBC + Acorns’s Grow, MarketWatch and The Financial Diet.
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Sure, that's a lot to unpack! The article seems to delve into various financial topics, focusing primarily on managing one's finances, understanding net worth, utilizing calculators, exploring different types of loans and credit, discussing investments, insurance, banking, taxes, money transfers, real estate, and legal and small business aspects. There's also a section on various financial advisors and their roles.
Net worth, the central concept here, is essentially a snapshot of your financial health. It's calculated by subtracting your liabilities (what you owe) from your assets (what you own). Positive net worth means your assets exceed your liabilities, while a negative net worth implies the opposite.
The article emphasizes the importance of understanding your assets and liabilities accurately to calculate your net worth effectively. It touches on various types of assets like stocks, bonds, real estate, personal property, and cash. The growth rates of assets and liabilities, as well as how they impact net worth, are also discussed.
Beyond net worth, it delves into financial management strategies such as increasing assets, decreasing liabilities, saving more, cutting spending, and increasing revenue streams. It even provides insight into average net worth statistics for Americans and highlights the importance of financial advisors in managing wealth.
There's a wealth of information here covering a broad spectrum of financial topics, from personal finance management to investment strategies, retirement planning, and even guidance on finding the right financial advisor. The article seems to serve as a comprehensive guide for individuals seeking to understand and manage their finances more effectively.
