Your net worth is a single number, and most people calculate it incorrectly.
They add up their savings, glance at the retirement account, and subtract the credit card balance.
That's a rough guess with a confidence problem.
The real formula is simple: everything you own minus everything you owe.
The trouble is that "everything" is a longer list than most people think, and the mistakes tend to run in one direction.
People forget debts and overcount assets, which makes the number look better than reality — a dangerous thing when you're using it to make decisions.
Checking and savings accounts, retirement balances, brokerage accounts, the market value of your car, and a realistic estimate of your home if you own one.
Add money owed to you, like a security deposit coming back.
Then list what you owe: mortgage balance, car loan, student loans, credit cards, medical bills, personal loans, and any buy-now-pay-later balances.
Those four payments of $37.50 feel invisible until you add them up.
The car is where the math gets emotional.
Most people use what they paid, not what it's worth now.
A $32,000 SUV bought three years ago might sell for $19,000 today, and that gap is real.
Check a site like Kelley Blue Book or Edmunds for a trade-in value, then subtract whatever you still owe on the loan.
Plenty of Americans are underwater on their cars right now, and the net worth statement is where that shows up.
Use a conservative estimate — a recent appraisal, or a site like Zillow minus about 5% to account for what the market actually pays.
If you bought in 2021 at a low rate, you may have more equity than you expect.
If you bought in 2022 near the peak with a small down payment, you may have less.
Neither is your expected inheritance, your tax refund, or the raise you're hoping for.
Net worth measures what exists today, not what might.
Doing it monthly invites anxiety over market swings you can't control.
Doing it once a year means you miss trends — like a credit card balance that crept from $2,000 to $9,000 without a single dramatic purchase.
Total net worth, and net worth excluding your home.
The second one tells you how much liquid wealth you actually have, which matters more when a job loss or a big repair hits.
A household with a $400,000 net worth that's mostly home equity is in a very different position than one with $400,000 in investments.
Finally, compare yourself to your own past numbers, not to national averages.
The Federal Reserve's surveys include everyone from 22-year-olds with negative net worth to retirees with seven figures, and the middle of that range tells you almost nothing about your situation.
A number that climbs $500 a month is working.
A number that's flat while your income rises is a signal that something is leaking.
The point of this exercise isn't to feel good or bad.
It's to see the whole board — debts included — so you can decide where the next dollar goes.
Run the math honestly once, and you'll likely spot at least one account you'd been quietly avoiding.
Final Thoughts
A number you don't like is still more useful than one you invented.