To calculate your net worth, add up everything you own at its current fair market value and subtract everything you owe at its current payoff balance. The result is one number: Net Worth = Total Assets − Total Liabilities. A positive figure means you own more than you owe. A negative figure, common early in a career when student loans and a mortgage dwarf savings, means the reverse.
The math is easy. The work is being honest about what belongs on each side and what each item is actually worth today.
Assets: What You Own and How to Value Each Type
Every asset gets counted at its current value, not what you paid for it and not what you hope to sell it for someday.
Cash and Bank Deposits
Start with the easiest numbers: checking accounts, savings accounts, and money market deposit accounts. These are liquid, meaning you can spend or transfer them immediately. Certificates of deposit also count as liquid assets even though cashing one out early triggers a penalty. For net worth purposes, include the full CD balance. The penalty only matters if you actually break it early.
Investment and Retirement Accounts
Stocks, bonds, mutual funds, and ETFs held in brokerage accounts are valued at current market price. Your brokerage statement shows the closing value each day, so use the most recent statement or a real-time balance.
Retirement accounts — 401(k)s, traditional IRAs, Roth IRAs, SEP-IRAs, and similar plans — also count. The IRS requires plan assets to be valued at fair market value, not what you originally contributed.1Internal Revenue Service. Valuation of Plan Assets at Fair Market Value Use the current account balance.
One nuance worth understanding: a $200,000 traditional 401(k) and a $200,000 Roth IRA look identical on a net worth statement, but they’re not equivalent in practice. Every dollar you withdraw from a traditional 401(k) is taxed as ordinary income, while qualified Roth withdrawals come out tax-free.2Internal Revenue Service. Roth Comparison Chart The standard convention is to list both at face value. If you want to understand your real spending power in retirement, the traditional account is worth less once taxes come out.
Withdrawals before age 59½ generally trigger a 10% additional tax on top of regular income tax, with limited exceptions for situations like total disability or certain medical expenses.3Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions The penalty doesn’t change how the account factors into net worth. You still count the full balance.
Real Estate
Your home is probably the single largest item on the list. What matters is its current fair market value, not what you paid five or fifteen years ago. Property tax assessments are often outdated and can miss the mark in either direction. A professional appraisal or a comparative market analysis from a real estate agent gives a more reliable figure. Appraisals for a single-family home typically run a few hundred to over a thousand dollars.
Rental properties, vacation homes, and raw land go on the asset side the same way, each at current fair market value. Don’t subtract the mortgage here. The mortgage is a separate line on the liability side, and keeping the two apart is how the calculation stays honest.
Vehicles, Collectibles, and Personal Property
Cars, boats, jewelry, fine art, rare collectibles, and precious metals all count. For vehicles, industry guides like Kelley Blue Book give current resale value, which is almost always less than what you paid. For collectibles and artwork, periodic professional appraisals are the only reliable way to capture current value, since these markets swing with trends and demand.
Cryptocurrency and Digital Assets
The IRS treats convertible virtual currency as property, not currency, and applies the same general tax principles that govern other property transactions.4Internal Revenue Service. Revenue Ruling 2023-14 Value crypto holdings at fair market value on the date you’re calculating, typically the spot price on the exchange where you hold the asset.
Volatility makes this number move day to day more than almost anything else on the list. A portfolio worth $50,000 on Monday might be worth $38,000 on Friday. Use the same date for every asset in your calculation. Otherwise the total isn’t comparable to any prior snapshot.
Business Interests and Private Equity
Ownership in a private business adds real complexity. If you hold a membership interest in an LLC or a partnership, the asset is your proportional share of the company’s equity. Common approaches to valuing that share include book value (assets minus liabilities on the company’s balance sheet), applying a multiple to earnings, or running a discounted cash flow analysis. Valuation experts often reach very different numbers for the same interest. For any business interest large enough to materially affect your net worth, a certified valuation analyst is worth the cost. Professional business valuations typically range from a few thousand dollars for a simple operation to $10,000 or more for complex businesses.
Restricted stock units, stock options in pre-IPO companies, and other private equity stakes belong here too. Unlike publicly traded stock, these usually carry restrictions on when and how you can sell, and that illiquidity generally warrants a discount on their theoretical value. They still represent real economic interest and should be included.
Liabilities: What You Owe
The liability side covers every dollar you owe, at the current payoff balance.
Secured debts include mortgages, home equity lines of credit, and auto loans. Ask the lender for the payoff balance. This is not the same as the sum of your remaining monthly payments, which include future interest you haven’t been charged yet.
Unsecured debts include credit card balances, student loans, medical bills, and personal loans. List each at its current principal plus any accrued interest as of the date you’re calculating. Don’t skip the easy-to-forget ones: a balance in collections you’ve stopped thinking about, a loan from a family member, an overdue tax bill. Federal tax liens are a particularly aggressive form of liability because they attach to everything you own, including property, investments, and future assets acquired while the lien is in place.5Internal Revenue Service. Understanding a Federal Tax Lien
Contingent liabilities — potential obligations that depend on a future event, like a personal guarantee on a business loan or a pending lawsuit — generally do not count until they become actual debts. Federal personal net worth statements used for program eligibility explicitly exclude them.6U.S. Department of Transportation. Personal Net Worth Statement for DBE/ACDBE Program Eligibility The exception is a cosigned loan where the primary borrower has stopped paying. That debt has crossed from contingent to real.
Common Valuation Mistakes
People tend to inflate asset values and undercount liabilities. The typical missteps:
- Listing a car at what you paid for it instead of what it’s worth today.
- Using a home’s purchase price or an outdated tax assessment rather than current market value.
- Counting retirement contributions at face value while forgetting the tax bill traditional accounts carry.
- Cherry-picking a favorable date for volatile holdings like cryptocurrency.
- Forgetting old debts in collections, family loans, or unpaid tax obligations.
- Using the sum of remaining loan payments instead of the current payoff balance.
Pick a single date for the calculation and apply it consistently to every asset and every debt. That’s the only way the number is comparable over time.
When the Standard Calculation Changes
The plain formula gives you a personal snapshot. Two situations call for adjustments.
Accredited Investor Status
Net worth determines access to certain investments. Under SEC rules, you qualify as an accredited investor if your net worth exceeds $1 million, either individually or jointly with a spouse or partner.7U.S. Securities and Exchange Commission. Accredited Investors This threshold opens up private placements, hedge funds, and other offerings not available to the general public.
The catch: the accredited investor calculation uses a modified net worth. Under the Dodd-Frank Act, your primary residence does not count as an asset. If the home’s fair market value exceeds the debt secured by it, neither side appears in the calculation. If you owe more on the mortgage than the home is worth, that underwater amount does count as a liability. And if you borrowed against home equity in the 60 days before an investment, that increase in debt is added to the liability side even when the home’s value still exceeds the total mortgage.8U.S. Securities and Exchange Commission. Accredited Investor Net Worth Standard The rule exists to stop people from borrowing against their house right before an investment to pad the number.
Joint Ownership and Marital Property
If you’re married or share ownership of assets, an individual net worth number depends on how property is titled and, in some cases, on state law. For a joint statement, combine everything. For an individual figure, jointly held accounts and property are typically split by claiming half the value as yours. That won’t be perfectly accurate in every situation, but it’s the convention most financial statements follow.
Nine states follow community property rules, where most assets acquired during a marriage are presumed to belong equally to both spouses. The rest use equitable distribution principles, where ownership isn’t necessarily 50/50 and depends on the circumstances of the marriage. Assets you owned before the marriage, inherited separately, or received as a gift typically remain individual property in most states and go entirely on your personal statement.