Understanding Your Net Worth
Net worth is the single best measure of your overall financial health. It is simply what you own minus what you owe. Unlike income, which is a flow, net worth is a snapshot of your financial position at a point in time. Tracking your net worth over time is the most effective way to measure whether you are making financial progress.
What Is a Good Net Worth?
Net worth benchmarks vary dramatically by age. The median net worth in the US is approximately: under 35: $39,000; 35-44: $132,000; 45-54: $247,000; 55-64: $364,000; 65-74: $409,000. However, financial experts like Thomas Stanley (The Millionaire Next Door) suggest your target net worth should be: (Age x Pre-tax Income) / 10. For example, a 40-year-old earning $100,000 should have a net worth of at least $400,000.
How to Increase Your Net Worth
There are only two ways to increase net worth: grow your assets or reduce your liabilities. The most effective strategies include: maximizing retirement contributions (especially with employer match), paying off high-interest debt aggressively, building an emergency fund, investing consistently in low-cost index funds, and increasing your income through career development or side income. Small improvements compound dramatically over decades.
Frequently Asked Questions
Should I include my home in my net worth?â–¾
Yes, your home is an asset and should be included along with your mortgage as a liability. The difference is your home equity. However, some financial planners calculate a separate "investable net worth" that excludes your primary residence, since you cannot easily access that equity without selling or borrowing. Both perspectives are useful.
How often should I calculate my net worth?â–¾
Monthly or quarterly is ideal. Regular tracking helps you spot trends, celebrate progress, and catch problems early. Many people use a simple spreadsheet or an app to automate tracking. The important thing is consistency -- measuring at regular intervals gives you a clear trajectory of your financial health.
Is it normal to have a negative net worth?â–¾
Yes, especially in your 20s and early 30s. Student loans, a new mortgage, or car loans can easily result in negative net worth. The key is that your net worth should be trending upward over time. If you are consistently paying down debt and saving, you are on the right track. Most people cross into positive net worth territory in their 30s.
Does net worth include pre-tax retirement accounts?â–¾
Yes, include the full balance of pre-tax accounts like 401(k)s and Traditional IRAs. While you will owe taxes upon withdrawal, the standard net worth calculation includes these at face value. For a more conservative estimate, you can discount pre-tax accounts by your expected tax rate (e.g., count only 75-80% of the balance).
Calclypso Editorial Team
Reviewed by certified financial planners. Last updated: April 2026. Net worth calculations reflect values at a point in time. Asset values fluctuate with market conditions. Update regularly for the most accurate picture.