What Is Net Worth and How Do You Calculate It?

Summary

• Net worth is the value of what you own minus what you owe.
• Assets can include cash, bank accounts, real estate and other property with economic value.
• Liabilities can include mortgages, credit card balances, car loans and other debts.
• Tracking net worth over time can give you a broader view of your financial position and help with long-term planning.

Net worth is more than the amount of money you earn or keep in the bank. It is a snapshot of your overall financial position based on two sides of your finances: your assets and your liabilities.

The basic calculation is straightforward:

Net worth = total assets - total liabilities

If your assets are worth more than your liabilities, your net worth is positive. If your liabilities are greater than your assets, your net worth is negative. Either way, the number can help you understand where you stand and what may need attention.

Understanding Assets and Liabilities

Assets are resources you own or control that have economic value. Depending on your situation, they may include cash, bank accounts, real estate and other property.

Liabilities are amounts you owe. Common examples include:

• Mortgage balances
• Credit card debt
• Car loans
• Other outstanding debts

Looking at both together gives you a broader picture than looking at income, savings or debt alone.

Why Net Worth Matters

Your net worth can change as the value of your assets and liabilities changes. Checking it periodically can help you see your financial progress and identify areas you may want to address.

It can also provide useful context as you think about long-term goals such as retirement and estate planning. A lower or negative net worth does not tell your entire financial story, but understanding the number can help you make more informed decisions about what comes next.

If you use First Financial Digital Banking, Manage Money includes visual tools that can help you track your net worth over time alongside spending, budgets and financial goals.

How to Calculate Your Net Worth

Start by making two lists: what you own and what you owe.

1. Add Up Your Assets

List the current value of assets such as bank accounts, real estate and other property you own. Add those values together to find your total assets.

2. Add Up Your Liabilities

List your outstanding debts, including mortgage balances, credit card balances, car loans and other amounts you owe. Add them together to find your total liabilities.

3. Subtract Liabilities From Assets

Subtract your total liabilities from your total assets. The result is your net worth.

For example, if your assets total $300,000 and your liabilities total $180,000, your net worth would be $120,000.

4. Revisit the Number Over Time

Because account balances, debts and property values can change, your net worth can change too. Recalculating it periodically can help you see how your financial picture is evolving.

Put Your Net Worth in Context

Net worth is one way to understand your financial position, not a complete measure of your financial well-being. Use it alongside your income, spending, savings, debt and long-term goals to get a clearer picture of your finances.

As your priorities change, that broader view can also support conversations about a financial plan, retirement and the legacy you want to leave.