Net Worth Defined and Calculated: What's My Net Worth?

How to Calculate Your Net Worth

By Christy Bieber – Updated Jan 1, 2026 at 12:46 AM EST

Key Points

Net worth is a measure of how much wealth you have that represents financial stability.
Net worth is calculated by adding up the value of assets and subtracting the amount of liabilities.
Investing regularly in the stock market can boost your net worth over time due to compounding.

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A person using a calculator with financial charts on the desk. — Image source: Getty Images.

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Let's take a look at what net worth is, how to calculate it, and how your net worth compares to people in similar circumstances.

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Net worth is the difference between what you own (cash, stock, and other items) and what you owe (your debts and other liabilities). Another way to describe net worth is the excess of your assets over your liabilities. Your net worth can be positive or negative.

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Asset

An asset is a resource used to hold or create economic value.

An asset is something you own that has value and that can provide you with some economic benefit.

For example, a savings or checking account is an asset that provides you with both interest and the option to spend. With stock, you own the right to your share of the company's future dividends.

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A liability, on the other hand, is the opposite of an asset. It represents a future sacrifice of economic benefit. Debts like credit card balances, car loans, mortgages, and student loans count as liabilities.

The more your assets exceed your liabilities, the greater your net worth. However, if your liabilities greatly exceed your assets, you may be in some financial trouble.

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Examples of common assets and liabilities.

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These are just some of the many assets and liabilities that exist. Depending on your life circumstances, you may have more or fewer assets and liabilities than someone in a similar scenario.

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Net worth by age.

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When you look at net worth by age, there are a few key things to know.

First, net worth typically goes up over time, so it is normal for young people to have a lower net worth.

Second, average net worth often appears artificially high because the tremendous wealth concentration in the top few percent of households skews the averages upwards.

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Median net worth values tend to represent household wealth better by avoiding this problem. Remember, the median is the value at which half of households have more and half have less.

For those aged 45-54, for example, you might feel behind if your net worth is $300,000 and you see the average as $971,270. In reality, your $300,000 net worth is in the top half of households since it's above the median of $246,700.

Again, if your net worth falls below the average or median, don't worry. This is only one measure of household value, and there are several ways to improve over time.

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Net worth by race.

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As you'll note, the disparity in average net worth and median net worth across ethnicities is vast.

This is due to the ongoing effects of generational poverty and systemic issues that have hindered certain groups throughout our nation's history.

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Net worth by education level.

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Education continues to play a significant role in average and median net worth. Having a college education is clearly a major factor impacting the ability to accumulate and conserve wealth over time.

Part of the reason a college degree is so valuable is that it has numerous follow-on effects beyond just the piece of paper you receive at graduation.

A college education often helps you build strong networks, make valuable professional connections, and learn key life lessons that go beyond classroom material.

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Is Common Stock an Asset or a Liability?

Assets or liabilities? We explain accounting for common stock.

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Net Worth FAQ

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About the Author

Christy Bieber is a contributing Motley Fool retirement and Social Security expert covering retirement planning, 401(k)s, IRAs, and other personal finance topics. Christy has written about finance since 2008 and previously taught business courses at Bryant & Stratton College. She holds a law degree from UCLA and a bachelor’s degree in English, media, and communication with a certificate in business management from the University of Rochester. In law school, she earned three CALI Awards for Excellence for the highest scores in civil procedure and contract law exams.

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