What is my net worth and how to calculate it?


Your net worth is the total value of everything you own minus what you owe. When you know your net worth, you have a good indicator of your overall financial health. 

Calculating your net worth can help you make better short-term financial decisions. It also allows you to plan for long-term financial goals, for example, retirement planning and adding to saving accounts. This guide will help you work out yours. 

Don’t worry if it’s not as high as you’d like it to be. You can always reach out to a financial advisor for help. First, though, you need to ask yourself: “What is my net worth?” 

Let’s get to the most common frequently asked questions:

  • What is net worth?
  • What does my net worth include?
  • Can my net worth be negative?
  • Why is net worth important? 
  • What should my net worth be at 40? 
  • How to calculate net worth? 

Q1: What is net worth? 

Before you can begin calculating net worth, you need to know what it is. As mentioned above, net worth is the value of all your assets and liabilities. 

So, determining your net worth means adding up your total assets. Then, to arrive at your net worth, subtract the cost of your total debt. 

It’s similar to calculating business net worth. However, in business, net worth is also known as book value on a balance sheet. 

But, while many people think net worth only applies to businesses, knowing your net worth offers several advantages. 

Future home buyers, in particular, can benefit from working out their net worth, and it helps them figure out what they can afford and which mortgage lenders to choose. 

People planning to build a superannuation fund would also benefit, as would budding investors with their eyes on mutual funds (SMSF) and buying stocks. 

Note: Overall, knowing your net worth is important because it can help you make a financial plan that makes sense for your financial situation. More on this later. 

Q2: What does my net worth include? 

So, we already know that your net worth is your assets minus your liabilities. But what are assets and liabilities? 

Your assets are the things you own. These include your tangible or liquid assets, such as real estate, personal property, options trading and other investments, and the cash in your bank account (I.e. cash held in a term deposit or savings account). 

Your total liabilities include all debts, for example:

Total liabilities do not include outgoings like car insurance or home insurance

Q3: Can my net worth be negative? 

You can have a negative net worth if the amount you owe is greater than the sum of your assets. So, if your loan and credit card debt is higher than the value of the things you own, you’ll need to improve your net worth. 

There are several ways to reduce debt. Debt consolidation for your credit products is one. To find out if it could help you save, compare variable and fixed rates using a refinance calculator. 

You could also invest money into one of many different investment accounts available. 

Important: To avoid making money matters worse, seek out financial advice before taking steps to reduce debt

Q4: Why is net worth important? 

Net worth calculations are essential because they show you whether your personal finance is healthy, like credit score and credit reports. Plus, it’s helpful to understand your current situation if you’re planning on saving money or increasing your net worth. 

Here’s a little more information on the importance of knowing your net worth. 

Meet financial goals 

Whatever your financial goals are, you’ll reach them faster if you understand your net worth. 

You might be interested in home buying, for example. Or, you might want a certificate of deposit from credit unions but be unsure whether it’s worth it, given current CD rates

If that’s the case, your net worth could tell you how much value each venture would add to your total. 

However, you might instead be trying to improve on your bad credit. Totalling up the value of your assets and liabilities could show you which areas of your finances need strengthening. 

Perhaps it helps you decide to open cash management accounts to improve your passive income. Or maybe you’ll realise you need to sell off one or more assets to manage your outgoings better. 

Amongst other things, this could help you get better loan offers and improve your estate plan. 

Know what to spend 

Knowing your net worth can help you spend within your means. You see, you could have a balance transfer credit card, healthy debit cards, and a cash-rich checking account. 

But, the total of your liabilities might still be roughly equal to or more than these assets. So, just because you have the funds to make a big purchase doesn’t mean it’s justifiable. 

Budgeting will help you plan to put more money towards something big, like your retirement accounts. 

Pay off debt 

When you know your debt is high, you can plan to pay off debt faster. To do so, you should avoid borrowing money until you can put a dent in your liabilities. 

That is unless you take out debt consolidation loans to pay off ongoing loans, such as a personal loan and business loan. Or if you wanted to refinance your mortgage for a better deal. Just make sure the refinance rates make the new loan worth it. 

When paying down debt, avoid payday loans and loans for bad credit with high-interest loan rates. Finally, always focus on paying your bills on time.


Q5: What should my net worth be at 40? 

Your net worth changes over time, and this is because the value of your assets increases or because you pay off more debts in their entirety. The rate at which this happens is different for everyone.

Still, it is good wealth management practice to track your net worth. Do so by comparing your net worth to average rates. Then, set goals based on what you want your net worth to be by a certain age. 

Note: The average net worth is somewhere north of $441,649 by age 40 in Australia. Add up your assets and use a savings and payoff calculator to work out your goals and plan for the future.

Q6: How to calculate net worth? 

Learning how to calculate your net worth is easy because there are no complicated equations involved, and all you have to do is add up the value of the assets you own and minus any money you owe. 

The difficulty comes in gathering together all the information you need, including up-to-date information on the market value of your assets, which can fluctuate over time. It also, of course, includes the loan balance of any outstanding debts. 

To ensure you always have the details you need, keep everything in a folder as this will help manage the money you have now and the debt you still owe. 

You should also update the information you regularly have. Do so with the help of loan calculators, and any up-to-date loans refinance data you need. In addition, check on your investments frequently (I.e. managed funds, your stock portfolio, and cryptocurrencies) to decide if you need to rebalance your portfolio.

Note: Calculating your net worth is quick and easy with all of your financial information on hand. So, make sure to stay on top of your financial position. 

In summary

It’s so worthwhile to know your net worth. When you do, you can benefit from better financial planning. Not to mention the fact that you’ll have a clear snapshot of your financial health in the here and now. 

If your net worth lets you know that you need some help, then speak to financial advisers. They can fill you in on everything from the right stocks to buy to the best mortgage rates for your financial situation. 

Or, visit the WeMoney website and app. Whether you need a mortgage calculator or community support, our platform is here to help. 

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Disclaimer: The author is not a financial advisor and the information provided is general in nature and was prepared for information purposes only. This article should not be considered to constitute financial advice. Accordingly, reliance should not be placed on this article as the basis for making an investment, financial or other decision. This information does not take into account your investment objectives, particular needs, or financial situation.

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