Calculate Your Net Worth: Why and How

Your net worth is a report card for your personal finances. Using the school reporting scale of A to F, how do you think you’ll score?

Knowing your net worth is the single most important measure of personal wealth. It’s a summary of all your financial decisions and habits, both good and bad.

Calculating your net worth for the first time can be as confronting as stepping on the scales before undertaking a new healthy eating plan. It may be scary to find out where you are at, however without that first step into the unknown, you’ll never know your precise financial situation.

Your net worth shows if your financial future is sustainable.

Will you be ready to retire in your 60s? Or maybe you’re saving for early financial independence?

What would your financial report card say?

What Is Net Worth?

Your net worth is your assets (things of value) minus your liabilities (money you owe). Yep, it’s so easy, you may wonder why you haven’t done it before. I know I did.


An image with the words Assets: items you own which have financial value

This is any item you own of value even if you took out a loan to buy it and are still paying it off.

Assets include:

  • Your home*
  • Investment properties*
  • Money in superannuation accounts
  • Cash
  • Savings, bonds, stocks, mutual funds
  • Vehicles, RVs etc*
  • Jewellery, artwork & notable items if professionally appraised

*Real estate and vehicles are to be at current market value – what you would get if you were to sell them at the time of calculating your net worth.

*Some people do not include vehicles in their calculations. Cars, motorbikes, caravans etc are not viewed as financial investments due to their rapid depreciation. They generally do not hold any long term value.


An image with words that says: liabilities, when you owe money

Liabilities are any debts you have on anything you owe money. When calculating your liabilities use the total amount owing, and not the weekly payments.

  • Secured debt, such as a mortgage/home loan
  • Unsecured debt, personal loans for items like cars
  • Credit card debt
  • Student loans
  • Taxes owing
  • Anything else you owe money

Calculate Your Net Worth

  1. Make a list of all your assets and their value and add them together
  2. List all your liabilities and add them
  3. Assets minus liabilities equals net worth

Now you know your financial position, you have a reference point for measuring progress.

By calculating and tracking your net worth once a month, you’ll begin to see patterns of where you are gaining or losing financial value.

Knowing your financial standing will help you to meet short and long term goals, including retirement.

The Australian Securities and Investments Commission has a very useful ‘Money Smart’ website which includes many online financial calculators. Check out their net worth calculator here.

Tracking Your Net Worth

If you’re not used to tracking your finances it can be quite daunting to gather all the required information for the first time.

To get your latest finance figures you’ll need online access to all your bank accounts; shares, stocks and bond accounts; superannuation accounts; mortgage, personal loans, credit cards and pay day loans; student debt accounts; and, taxation records if you have money owing.

You’ll also need to know the current market value of any real estate and vehicles, plus have a professional appraisal of any valuable jewellery, artwork or other notable items.

Whilst this may seem overwhelming, you’ll need to know everything about your personal finances to have a good understanding of your financial situation.

Once you have gathered all the data needed, it’s a good idea to create a table on Word or a spreadsheet on Excel to track your personal worth. If you don’t have access to computer, you could rule up a chart and track your data manually.

Here’s a simple example of how you could track your net worth.

A net worth tracking example

By tracking your finances, you can immediately see what is increasing and what is decreasing. This will assist you to make informed financial decisions.

The section for notes is to record unusual differences such as having to buy a new fridge, going on a holiday or starting a new job.

If you are after something more detailed with pie charts and line graphs check out the Aussie Firebug blog.

Average Australian Net Worth

The last Australian census measuring Household, Income and Wealth was in 2015-16.

Using this data the Sydney Morning Herald reported the average Australian’s net worth by age as being:

  • 25 – 34 years: $268,800
  • 35 – 44 years: $573,300
  • 45 – 54 years: $944,900

Most of this wealth is tied up in real estate (the house you live in) and in compulsory superannuation funds.

I know when we first calculated our net worth we were surprised, and not pleasantly. Although, now we are more knowledgeable we’ve been able to make changes to our finances.

How is your net worth report card looking?

What To Do If You Have A Low Net Worth

If you are young and new to the workforce with a large student debt, your net worth is likely in the negative. Don’t worry too much, as time is on your side. With an affordable lifestyle backed up by sensible spending, you’ll soon get ahead. Scott Pape, the Barefoot Investor, has great advice on how to allocate your money into different accounts.

You may find your net worth is in the negative due to over-borrowing. Perhaps it’s a huge credit card debt or an unaffordable bank loan. In this scenario it would be beneficial to reduce your spending by living frugally and focus on paying off debt. Make sure you negotiate the best deal possible with your bank. By having a lower interest rate, you’ll be able to pay off your debt faster. There’s a lot of useful information on the ASIC Money Smart website about borrowing and credit.

For others, it’s the small expenses added up that drain the pockets. For example, if you earn $60,000 in a year and your net worth is $5,000 consider your discretionary spending: cafes, new clothes, shoes, cinema outings etc. Can you see a pattern of spending? Are there any areas for improvement to increase your savings?


Knowing your financial net worth is not a measure of your personal attributes or how you contribute to the lives of others, rather it is a tool to assist you in ensuring you have a financially sustainable future.

Is your future financially sustainable?

Disclaimer: I am not a personal finance advisor. Please do your own research and seek professional financial advice if required.

Fun Fact (or not)

Find out how much net worth you have tied up in your car (a depreciating asset) by doing this calculation:

Value of car ÷ net worth = percentage of net worth tied up in a car that is losing value each year.

How do you track your net worth?

Do you use a spreadsheet, App or another method?

Please comment below to share the knowledge.

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