What Is Tracking Your Net Worth, Worth?

Updated on August 15, 2023 Updated on August 15, 2023
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Do you know your net worth, does it matter? What is tracking your net worth, worth?

There are tons of numbers to track when it comes to your finances, and net worth is one of them. But what exactly is net worth and is it a number worth tracking?

What is Net Worth?

Net worth is the number you get when you total up all of your assets, total up all of your debts, and subtract the two numbers.

Assets include cash, investment accounts, any real estate you own including your home, automobiles, household goods (The things that would have resale value like art or China. You don’t need to figure out the worth of every towel and doily), and the cash surrender value of any life insurance policies you have.

For most of us, I think we can get a pretty accurate picture of our net worth with just those first four. Unless you have very costly art or jewelry, household goods are going to be mostly negligible, and it’s hard to estimate the resale value of stuff like furniture and appliances.

Don’t include any inheritance you expect (or hope) to get. It’s too uncertain to be included in your calculation.

What numbers do you use for things like your home and car though? If your home is valued at $200,000 and you have a mortgage for $150,000 you put the full value ($200,000) on the asset side and the mortgage owed amount ($150,000) on the liability side.

The same for any automobiles, the full value is an asset, the amount left on the loan a liability.

Liabilities include all debt including credit cards, student, car and personal loans, and your mortgage.

If you have $100,000 in assets and $50,000 in liabilities, your net worth is $50,000. The number can be negative too. If you have $50,000 in assets and $100,000 in liabilities, your net worth is -$50,000.

You don’t have to do this math by hand. I know what you’re thinking, but it’s not Mint. Mint is a wonderful tool for budgeting, but there is a better way to get your net worth.

Personal Capital gives you that 1,000-foot overview of your entire financial picture, not just your budget. You link your asset accounts, and your liability accounts and Personal Capital will show you your net worth right on your dashboard. And it’s free!

How’m I Doin?

Yes, knowing your net worth is important, and that number is important because what gets measured gets managed. If you don’t know this number, you don’t have an overall picture of how financially healthy you are.

Consider using salary as a marker of financial health and progress. You’ve steadily increased your income year after year since you started working, so you’re doing great right? The number that represents how much money you make keeps going up.

But salary isn’t the whole story. Sure you might get steady raises but every time you do, you celebrate by going on a spending spree, and you’re in credit card debt as a result. Salary tells you nothing about your debt. Salary would also tell you nothing about investments.

If you only look at your assets while ignoring liabilities, calculating net worth will force you to take your head out of the sand. Great, your house is worth $750,000. But you still owe $700,000 on it; you have $80,000 in student loan debt and $50,000 in credit card debt. Definitely not doing great despite your baller house.

Got your number? Great, now how do you stack up? Well, we can’t really go by how most Americans are doing to determine that because most Americans are doing dismally. The median net worth for those under 35 is just $6,676. You want to be better than that!

Self-worth and net worth are not the same.

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Damn! According to this guy, my net worth should be almost $1 million! I feel shitty now. Maybe you do too. Okay, we’re going to have to do something about this!

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Improving Net Worth

If your number is negative, don’t think beyond getting it to zero. As with any goal, you have to break a big task into a series of smaller ones. You might think to have a $0 net worth sucks, but that zero represents no debt!

If you have credit card debt, use the snowball or stacking method to attack it. Check your credit score. If it’s good enough, get a balance transfer card or take out a consolidation loan with Upgrade If it’s student loan debt, refinance for a lower interest rate with Earnest.

Over the decades, investing fees can eat up a considerable chunk of your net worth. Use Personal Capital’s Fee Analyzer to see how much you’re paying and the long-term effects.

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Personal Capital showing projected portfolio value.
Personal Capital showing a donut chart of expenses.
Personal Capital retirement fee analyzer.
Access Personal Capital's tools on your computer, tablet, or smartphone.

Cut your expenses painlessly. Let Trim cancel subscription services you don’t really use and negotiate lower rates on some of your utilities.

If you’re not investing, what are you waiting for? You don’t have to be an expert to start investing with Betterment. If your employer offers a 401k, start contributing. These investments grow over time are what is going to increase your net worth.

What are you doing in your free time to bring in extra money? Driving for Uber, working on your blog, babysitting? Most of us have more free time than we realize and you shouldn’t be wasting it watching TV or playing video games when you could be bringing in a little extra cash.

Checking In

Once you have the number, how often do you need to check it, every day, once a week, once a month? I know some of you love playing around with your numbers, you check your Mint, Betterment, and Credit Karma accounts every day.

Well, if that’s your idea of a hot Friday night, go ahead and add Personal Capital to your list!

If you’re struggling to stay motivated while paying off debt, it’s a good idea to check in whenever you need a boost, see the last paragraph.

For the rest of us, once a month at most and once per quarter at least. It’s a good idea to check it before making any biggish financial decisions. What should you do with your bonus or tax return? Pay off some debt or take a vacation?

My brother asked to borrow $5,000, should I loan it to him? I really want to buy a home, but I only have a 10% down payment which means borrowing a lot of money and paying PMI. Should I do it or save up longer until I have 20%?

Take the dollar amount of these decisions and apply it to the asset or liability side of your number and recalculate. How do you feel about what your decision does to that number? These kinds of decisions have a real impact on our finances, and sometimes we don’t fully see it. Seeing how it affects your net worth can really show you what the right decision is and what making the wrong one will mean.

A Little Lagniappe

Lagniappe is a New Orleans word that means “a little something extra.” I thought I’d share the little something extra reason I started tracking my net worth. 

When I was in debt, I decided to tackle it once and for all. I used the snowball method and killed off a few of my smaller debts. Woo! I felt great.

But then I had to start tackling the more significant debts, which of course took much longer to pay off than those little ones. And I had already been paying off debt for several months. I was starting to lose motivation, always a dubious thing to count on when trying to achieve a goal anyway.

The number just didn’t seem to be going down at all. So I decided to start looking at a different number, my net worth. That number was going up a lot faster than the debt number was going down!

It gave me something else to focus on and seeing progress somewhere, anywhere! helped me stick to my snowball plan of action.

If you’re in debt and afraid to calculate your net worth, remember this little lagniappe. Watching that number get closer to zero lets you feel like you’re progressing. And once you’re part of the Zero Club, you can start growing that number up!

Show Notes

Schlafly Ibex Celler: A Barrel-aged Imperial Stout.

Armadillo Ale Works Brunch Money: An Imperial Golden Stout

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Candice Elliott - Senior Editor Candice Elliott is a substantial contributor to Listen Money Matters. She has been a personal finance writer since 2013 and has written extensively on student loan debt, investing, and credit. She has successfully navigated these areas in her own life and knows how to help others do the same. Candice has answered thousands of questions from the LMM community and spent countless hours doing research for hundreds of personal finance articles. She happily calls New Orleans, Louisiana home-the most fun city in the world.
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