Your net worth is what you own minus what you owe. Add up the value of everything you have, cash, investments, property, retirement accounts, then subtract all your debts. The number left over is your net worth. It's the single clearest measure of your financial position, and it's the number that actually defines a millionaire.
The simple formula
Net worth = total assets − total liabilities
- Assets are what you own that has value.
- Liabilities are what you owe to others.
That's the whole thing. Everything else is just deciding what counts on each side.
What counts as an asset
Add up the current value of:
- Cash, checking, savings, physical cash.
- Investments, brokerage accounts, index funds, stocks, bonds.
- Retirement accounts, 401(k), IRA, and similar, at their current balance.
- Property, your home's market value, and any other real estate.
- Vehicles, what they'd sell for today, not what you paid.
- Other valuables, a business you own, or significant items worth real money.
Use what things are worth now, not what you paid for them. A car you bought for $30,000 might be a $15,000 asset today.
What counts as a liability
Add up everything you owe:
- Mortgage, the remaining balance.
- Car loans.
- Student loans.
- Credit card balances.
- Any other debt, personal loans, medical debt, money owed to family.
A quick example
The Selfmade Newsletter: one idea every Friday on what self-made people do differently. Free, on Substack. Join here.
