Net worth is what you have of monetary value (assets) after you account for what you owe (liabilities). As a simple example, if you have $1,000 in savings and owe $500 to your cre𓆏dit card company, you have a net worth of $500 ($1,000 -༒ $500).

A positive net worth figure means that you have mor♊e assets with monetary value tha♒n debt.

When your net worth is positive and it keeps growing year by year, it's telling you that you are doing well at increasing your financial assets, such as income, savings, investments, and maybe adding a house. You also may be reducing debt.

That's a great message to receive. From a financial standpoint, you're in good health.

A net worth calculation is like GPS for your various savings goals, especialꦯly retir🍎ement. It tells you where you are now and where you need to go to reach your destination.

So, calculating your current net worth on an ongoing basis can help you keep your 澳洲幸运5开奖号码历史查询:retirement plans on track.

How to Calculate Your Net Worth

Net wo🍃rth is simply the total value of all assets min༒us the total value of all liabilities. It's a financial benchmark applied to companies and individuals. The formula is a simple one:

$\begin{aligned} &\text{Net Worth} = \text{Assets} - \text{Liabilities} \\ \end{aligned}$​Net Worth=Assets−Liabilities​

Here's what mak🍒es up th🦋e assets and liabilities categories.

Assets

There are liquid assets and illiquid assets. 澳洲幸运5开奖号码历史查询:Liquid assets are investments or ꦯpossessions that can be turned into cash relatively quickly with little or no loss of value.

Bank accounts, certificates of deposit, stocks, bonds, mutual funds, and 澳洲幸运5开奖号码历史查询:exchange-traded funds (ETFs) fall into this category.

澳洲幸运5开奖号码历史查询:Illiquid assets are investments or possessions that are difficult to convert into cash quickly. Your home (if you own i🦄t) is an illiquid asset, as are any other real estate holdings.

The balance in a 澳洲幸运5开奖号码历史查询:retirement savings plan (before you turn age 59½) and a bus🐟iness partnership are considered illiquid assets.

Most personal property, such as vehicles, furniture, and clothing, should be left out of 澳洲幸运5开奖号码历史查询:your net worth calculation. Even if they cost a lot to acquire, their resale value may be unknow𒆙n.

However, investment-quality art, jewelry, and collectibles could be assets you'd use in calculating net worth.

Liabilities

Liabilities are debts. Credit card balances, car loans, home 澳洲幸运5开奖号码历史查询:mortgages, student debt, and business loans 🍷all fall into this category. Personal loans count, too.

Where Do You Stand?

The chart below features the median and mean net worth figures for American hou꧙seholds by♋ age group.

The data was compiled by the Federal Reserve Board's Division of Research and Statistics in its 2022 survey of assets, debts, and financial behavior of U.S. households. The next survey, begun in February 2025, will be published in late 2026.

The median is the figure below which half of families have less net worth, and above which half have more net worth. The mean figure is the average net worth calculated from the net worth for all families in the age group.

Don't place too much importance on how 澳洲幸运5开奖号码历史查询:your net worth compares to these numbers. They🌳 are just meant to give you a sense of the range𝐆 of national data.

N🍬ote the big differences in mean and median net worth in each age category. Remember that the mean is an average. A relatively few affluent families can skew the average. That may be why the mean net worth of American families younger than age 35 tops $183,000.

The Ideal Number

What should your net worth be? Every person has their own lifestyle and individual expectations, so there is no one-size-fits-ꦓall, universally agreed-upon number.

That said, Thomas J. Stanley and William D. Danko, authors of "The Millionaire Next Door: The Surprising Secrets of America's Wealthy" offered this formula as rule of thumb:

$\begin{aligned} &\text{Net Worth} = \frac{ \text{Age} \times \text{Pretax Income} }{ 10 } \\ \end{aligned}$​Net Worth=10Age×Pretax Income​​

Your annual household pretax income multiꦓplied by you🐟r age, then divided by 10, equals "what your net worth should be," according to Stanley and Danko.

Using this foꦏrmula with a basic salary of $25,000, we get the following results:

The numbers in the middle-age ranges might look feasible, but the formula is less likely to work for people just startiᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚng out in life. Few 20-year-olds have rac൲ked up $50,000.

Then again,💖 most professionals, if all goes well, see a steady increase in salary over the years. Below, see the results for the same formula using increasing income:

The net worth estimates are still unrealistic for very young workers, and they're not great for 澳洲幸运5开奖号码历史查询:p🎶eople approaching their retirement years.

Still, the numbers may provide a benchmark for consideration. At the least, they m🌠ay help you determine if you ไare moving in the right direction.

The Marotta Formula

Interestingly, under the scenario where income rises with age, the net worth estimate above delivers results similar to those generated by aဣ formula devised by David John Marotta, a financial advisor.

Marotta recommended following a savings plan that would result in a net worth that, by age 72, was 20 times your annual spending.

Und♕er this plan, the older you get, the more you save. Since most people earn more as they grow older, this is not unrealistic.

The Bottom Line

A positive net worth is better than a negative one, a higher net worth is better than a lower one, and an increasing net worth is better than a static one. Words to live ꦚby.

If your net worth is negative, strive to get it to a positive number. Live within your means and build it by saving and investing, a little at a time. Create a budget, cut your spending, and pay off debts.

Even if you feel your net worth is high, keep increasing it to ensure that you have enough money to 澳洲幸运5开奖号码历史查询:live well during your retirement years.