You’ve created a budget, started saving, maybe even begun investing. But how do you really know if you’re getting ahead financially?
The answer: track your net worth.
Net worth is like your personal financial scoreboard. It gives you a clear picture of where you stand today—and how your financial choices are adding up over time.
In this article, you’ll learn what net worth is, why it matters, and how to start tracking it (even if you’re just beginning your money journey).
What Is Net Worth?
Net worth is the total value of what you own minus what you owe.
Formula:
Net Worth = Assets – Liabilities
Assets = what you own (cash, savings, investments, car, home, etc.)
Liabilities = what you owe (debts, loans, credit card balances)
If your assets are greater than your liabilities, you have a positive net worth.
If your debts are bigger than your assets, your net worth is negative—and that’s okay if you’re just starting out.
Why Tracking Net Worth Matters
It gives you a big-picture view of your financial health.
It shows real progress—even when your income or expenses don’t change much.
It motivates you to save, pay off debt, and build assets.
It helps you spot trends (growing, stuck, or shrinking) over time.
It keeps you focused on long-term wealth—not just day-to-day spending.
Step 1: List Your Assets
Start by writing down everything you own that has value.
Include:
- Checking and savings account balances
- Retirement accounts (401k, IRA)
- Investment accounts (stocks, ETFs)
- Real estate (home value)
- Vehicles (current resale value)
- Cash and valuables (if significant)
Use realistic values, especially for cars or property (check online estimates).
Step 2: List Your Liabilities
Next, list everything you owe.
Include:
- Credit card balances
- Student loans
- Auto loans
- Personal loans
- Mortgage
- Any other debt
Be honest and include the full balance—even if you’re making progress.
Step 3: Subtract Liabilities From Assets
This gives you your net worth.
Example:
Assets: $12,500
Liabilities: $8,000
Net Worth = $12,500 – $8,000 = $4,500
Your number might be small—or even negative. That’s okay. What matters is that you’ve started measuring.
Step 4: Choose a Tracking Method
Use whatever works for you:
- A simple spreadsheet (Google Sheets or Excel)
- A notes app with checklists
- A printable net worth tracker
- Apps like Empower, Monarch, or YNAB (some features are paid)
Update your net worth once a month or quarterly to see progress over time.
Step 5: Track Trends, Not Perfection
Your net worth will fluctuate. Market changes, big purchases, or life events can cause temporary dips.
What matters is the long-term trend. Is it generally increasing? Are debts going down? Are assets growing?
Don’t obsess over every bump—just stay focused on progress.
Step 6: Set Net Worth Goals (Optional)
Once you’re comfortable tracking, you can set small goals like:
- “Reach $1,000 in net worth”
- “Pay off enough debt to go from negative to zero”
- “Grow net worth by $2,000 this year”
These goals help you stay motivated—and they’re often more meaningful than income or savings targets alone.
Step 7: Use It as a Tool, Not a Judgment
Your net worth is not your self-worth. It’s just a tool to guide your financial growth.
Don’t compare your number to anyone else’s. Everyone has different journeys, incomes, and starting points.
Track it for you—and use it to make smarter decisions over time.
Final Thought: Know Where You Stand, So You Can Go Further
Tracking your net worth is one of the simplest and most powerful habits you can build. It gives you clarity, confidence, and direction—no matter where you’re starting from.
You don’t need fancy tools or big numbers.
You just need consistency, honesty, and a commitment to keep improving.
Know your number. Watch it grow.
And let that growth reflect the financial future you’re building—one step at a time.