What It Means
Net worth is the value of everything you own minus everything you owe. Your assetsAssetsThings you own that are worth money, such as cash, investments, a home or a car. Your assets minus your debts is your net worth. See more include cash, savings, retirement and other investments, a home and a car. On the other side are your liabilitiesLiabilitiesDebts and other money you owe, such as a mortgage, a car loan or a credit card balance. Your assets minus your liabilities is your net worth. See more: a mortgageMortgageA loan used to buy or refinance a home, secured by the home itself and repaid in monthly installments over a set term. See more, car and student loansStudent loanMoney borrowed to pay for college or career school, repaid with interest after you leave school; it comes from the federal government or a private lender. See more, and credit card balances. The Federal Reserve uses this same difference between assets and liabilities to measure the wealth of American families.
Try It: Add Up What You Own and What You Owe
Example figures to start. Put in today's values and balances.
The bar shows what you owe as a share of what you own: .
You owe more than you own right now. Big loans such as student loans or a new mortgage can do that, and it changes as balances come down.
How It Sounds at Home
- "Our net worth finally went positive this year."
- "The house is most of our net worth."
- "Paying off the car loan bumped our net worth up."
The Breakdown
Worked example. A couple in their thirties lists everything they own and owe:
| What they own | Value | What they owe | Balance |
|---|---|---|---|
| Cash and savings | $12,000 | Mortgage | $220,000 |
| Retirement accounts | $45,000 | Car loanCar loanAn installment loan used to buy a vehicle, repaid in monthly payments over a set term, with the vehicle as collateral. See more | $9,000 |
| Home | $280,000 | Credit cards | $3,500 |
| Car | $15,000 | Student loans | $18,000 |
| Total assets | $352,000 | Total liabilities | $250,500 |
Their net worth is $352,000 minus $250,500, or $101,500.
What the result means. One number on one day matters less than the direction it moves. Paying $3,500 off the cards raises net worth by $3,500, and a drop in what the house or car would sell for lowers it, even in a month when they saved. Most of this couple's net worth sits in the home, which they can't spend without selling or borrowing against it, so the cash line is the one to watch for emergencies.
Good to Know
The Federal Reserve's Survey of Consumer Finances put the median net worth of US families at $192,900 in 2022, up 37% from 2019 after adjusting for inflationInflationA general rise in the prices of goods and services over time, so the same amount of money buys less than it did before. See more, in its October 2023 report. Its mean was $1,063,700. A median is the middle family, half above and half below, while a mean adds everyone up and divides, so a small number of very wealthy families pull it far higher. For a sense of what's typical, the median is the figure to use. Use today's realistic value for a home or car rather than what you paid, and the payoff balance for each loan.
FAQ
How do I calculate my net worth?
Add up the value of everything you own, add up everything you owe, and subtract the second total from the first. The Federal Reserve measures family wealthGenerational wealthMoney, property and other assets passed from one generation of a family to the next, through inheritances, gifts during life or help such as paying for school. See more the same way.
What is the median net worth in the US?
$192,900 for all families in 2022, according to the Federal Reserve's Survey of Consumer Finances, published in October 2023. The mean was much higher, $1,063,700, because the wealthiest families raise the average.
Is a negative net worth bad?
It means you owe more than you own right now, which large loans such as student loans or a new mortgage can cause. What matters more is whether the number rises over time as you pay debts down and save.
Do It in Buhata
Net Worth, Accounts
Keep your balances in Accounts in Buhata, and check Net Worth, the number at the top of your home, on the same day each quarter to see which way it's moving.
Open BuhataRelated Terms and Categories
- Assets
Things you own that are worth money, such as cash, investments, a home or a car. Your assets minus your debts is your net worth.
- Liabilities
Debts and other money you owe, such as a mortgage, a car loan or a credit card balance. Your assets minus your liabilities is your net worth.
- Personal balance sheet
A one-page list of everything you own and everything you owe on a given date, with your net worth as the difference between the two.
- Debt-to-income ratio
Your total monthly debt payments divided by your gross monthly income, shown as a percentage; lenders use it to judge whether you can take on a new payment.
- Financial goals
Specific targets for your money, such as an emergency fund, paying off a card or a down payment, each with an amount and a date.
Sources
Federal Reserve Board, "Changes in U.S. Family Finances from 2019 to 2022: Evidence from the Survey of Consumer Finances" (Federal Reserve Bulletin, October 2023); Federal Reserve Board, "Survey of Consumer Finances (SCF)"
- www.federalreserve.gov/publications/october-2023-changes-in-us-family-finances-from-2019-to-2022.htm
- www.federalreserve.gov/econres/scfindex.htm
Last updated .