Net Worth Calculator

Understanding Net Worth: The Complete Guide

What Is Net Worth?

Net worth is the total value of everything you own minus everything you owe. It is the most comprehensive measure of financial health because it captures your complete financial picture in a single number. Whether you have $1,000 in a savings account and $500 in credit card debt (net worth: $500) or $500,000 in assets and $200,000 in mortgages (net worth: $300,000), this number tells you exactly where you stand.

Why Net Worth Matters More Than Income

Many people focus on income as the primary measure of financial success, but income alone tells an incomplete story. A doctor earning $350,000 per year with $400,000 in student loans, a $600,000 mortgage, and $50,000 in car loans may have a lower net worth than a teacher earning $55,000 who has been steadily saving and investing for 20 years. Income is what comes in; net worth is what you keep. The wealthiest people focus on growing net worth, not just income.

Liquid vs. Illiquid Net Worth

Your total net worth includes all assets, but not all assets are equally accessible. Liquid net worth counts only assets you can convert to cash quickly: checking accounts, savings accounts, brokerage accounts, and publicly traded investments. It excludes real estate, retirement accounts (which have early withdrawal penalties), vehicles, business equity, and personal property. Liquid net worth is crucial because it represents the money available if you face an emergency, lose your job, or want to seize an opportunity.

Typical Net Worth by Age (US Federal Reserve Data)

The Federal Reserve's Survey of Consumer Finances (2022) provides the most authoritative data on American household wealth. Median net worth (the middle household) by age:

• Under 35: $39,000 — Just getting started. Student loans and early-career income keep this low.
• 35–44: $135,600 — Career growth, home purchases, and early investing begin to compound.
• 45–54: $247,200 — Peak earning years. Mortgage equity and retirement accounts grow.
• 55–64: $364,270 — Pre-retirement accumulation. Debt is typically declining.
• 65–74: $409,900 — Peak net worth for most Americans. Mortgages are often paid off.
• 75+: $335,600 — Drawdown phase as retirees spend accumulated wealth.

How to Increase Your Net Worth

Building net worth comes down to two levers: grow your assets and shrink your liabilities. Here are the most effective strategies, ranked by impact:

1. Eliminate high-interest debt. Credit card debt at 20%+ APR destroys wealth faster than almost any investment can build it. Pay this off first.
2. Maximize retirement contributions. If your employer offers a 401(k) match, contribute at least enough to get the full match — it is an instant 50-100% return.
3. Invest consistently. Even small monthly investments in low-cost index funds compound dramatically over decades. $500/month at 7% annual return grows to over $580,000 in 30 years.
4. Build an emergency fund. 3-6 months of expenses in a high-yield savings account prevents you from going into debt when unexpected costs arise.
5. Increase your income. Negotiate raises, develop high-value skills, or start a side business. Then invest the difference rather than increasing spending.
6. Avoid lifestyle inflation. When your income rises, keep your spending relatively flat and direct the surplus to investments and debt repayment.

Frequently Asked Questions