Start Your Money Journey By Calculating Net Worth

Whether you’re rolling in ‘the legos’ or facing debt, it’s important to get a snapshot of your whole financial health by calculating your net worth.

Knowing your net worth is the first step to creating a financial roadmap of your future and meeting goals with your monthly spending and saving.

Net worth is surprisingly easy to figure out but will change throughout your life, such as with the purchase of a car or paying student loans. Checking it at least once a year is recommended to adjust your spending plan as necessary.

So, if you’re like me and have trouble getting started, tell your brain, “Silencio Bruno!” (anyone else a fan of the Luca movie?) and read on.

I’ll suggest a super easy way to get over procrastination paralysis with a free and simple app to connect your accounts to make the calculation for you!

Calculate Your Net Worth

To track your net worth, you can use an Excel or Google spreadsheet or there are also free apps that I’ll mention below.

Whether you do the calculations manually or with an app, the concept is the same.

First, identify and add up your assets. Then, subtract liabilities and debt to calculate a positive or negative net worth.

Assets – Liabilities = Net Worth

Net worth explained with Legos

For example, assets may include bank accounts, investments, home or car ownership.

Liabilities often encompass student loans, mortgage loan, car loan, or credit card debt.

Here’s a sample calculation example:

Assets

$10,000 emergency fund + $50,000 401k + $130,000 home value + $5,000 car value = $190,000

– Liabilities

$1,500 credit card, $99,000 home mortgage + $107,000 student loan debt = $207,500

= Net Worth

($190,000 – $207,500) = $-83,500

In this case, there’s more debt than assets, resulting in a negative net worth. But now that’s identified, debt can be snowballed and paid off, starting with the lowest balance (like the credit card) then working on the debt with the highest interest rate.

Apps to Calculate Net Worth

I use Empower to track my net worth and it takes the manual work out of the process and couldn’t be any easier! Mint also used to provide this service but is shutting down in March of 2023, Now, Credit Karma provides this service.

Empower

Using Empower lets me see the combination of assets subtracted by debt for an overall picture of how much money I really own on a day to day basis. It also divides my debt and assets by categories, including cash, investment, credit card, mortgage, and other, giving me granularity as well as the big picture.

Chart provided by Empower to show the sum of my investments; a sub category of my net worth

It also tracks my net worth overtime, allowing me to see my progress paying off debts and saving for retirement, which I find highly motivating.

I also use Empower to track my budget to see if I’m staying on target.

Empower referral $20 bonus

Ready to try it? Did I mention it’s free and has currently replaced the need for Mint for me?

Join Empower and use my referral link where you can receive a $20 bonus for starting. I didn’t get this perk when I started, so you should take advantage!

https://empowerreferral.link/a60011

Net Worth Health Check

Once you’ve calculated your net worth you may also be interested to check out this website to see how you compare to others your age in the United States.

According to 2024 info from the U.S. Census Bureau, this article suggests the following net worth you need to be considered poor, middle class, or wealthy in America:

Poverty Class: $6,030
Lower Middle Class: $43,860
Middle Class: $104,700
Upper-Middle Class: $201,800
Wealthy: $608,900

Comparing can help give you a sense of where you might fall in the spectrum of financial health and may motivate you to set some goals.

From Fermenting To Finance