What is net worth?
Your net worth is the value of everything you own minus everything you owe. It is the single number that best answers “how am I doing financially?”, because it looks at both sides of your finances at once. A high salary with large debts can leave you with a lower net worth than a modest salary with steady savings.
The net worth formula
Net worth = Total assets − Total liabilitiesDebt-to-asset ratio = Total liabilities ÷ Total assetsThe debt-to-asset ratio shows how much of what you own is financed by debt. Below 100%, you own more than you owe; above 100%, your net worth is negative.
Example: a homeowner with a mortgage
Say you own a home worth €250,000 today, have €15,000 in savings, €30,000 in index funds, €20,000 in a pension fund, a car you could sell for €12,000 and €3,000 in other valuables. Your total assets are €330,000.
On the other side, you still owe €160,000 on the mortgage, €8,000 on a car loan and €1,500 on a credit card. Your total liabilities are €169,500, so your net worth is €160,500 and your debt-to-asset ratio is about 51%: roughly half of what you own is still financed by the bank.
Now take a recent graduate with €3,000 in a savings account, a €6,000 car, a €25,000 student loan and €1,000 on a credit card. Assets of €9,000 minus liabilities of €26,000 give a net worth of −€17,000. That is normal at the start of a career; what matters is that the number rises year after year.
What counts as an asset and what counts as a liability
- Assets: your home and any other property, cash in current and savings accounts, deposits, stocks, funds, ETFs, bonds, crypto, pension savings, vehicles, a stake in a business and money other people owe you.
- Liabilities: the outstanding balance of your mortgage, car, personal and student loans, credit card balances, overdrafts, buy-now-pay-later plans, unpaid taxes and money you owe to friends or family.
Your salary and future income are not assets in this calculation. Net worth is a snapshot of what you have today, not of what you expect to earn.
Use today’s market value, not the purchase price
Value every asset at what you could realistically sell it for today. If you bought the home in the example for €200,000 and it is now worth €250,000, using the purchase price would understate your net worth by €50,000. The opposite happens with cars, which usually lose value every year: use the resale price, not what you paid. For investments, use the latest market price; for debts, use what you still owe, not the amount you originally borrowed.
Common mistakes
- Forgetting small debts. Credit card balances, overdrafts and instalment plans add up and are easy to leave out.
- Double counting. Count each asset once. If your investment account already holds cash, do not add that cash again under savings.
- Counting a home without its mortgage. If the property is on the asset side, the loan secured on it belongs on the liability side.
- Mixing currencies. Convert everything to one currency at current exchange rates before adding it up.
Why tracking your net worth over time matters
A single calculation is a useful starting point, but the trend tells the real story: are you paying down debt, is your property gaining value, are your savings keeping up with inflation? Checking once a quarter or once a year is enough to see where your money is going.
Total Worth does this for you. It tracks your real estate by price per square metre, cash in several currencies and investments year by year, and shows how your net worth evolves. It is free, needs no account, and your data stays in your browser.
Frequently asked questions
What is net worth?
Net worth is the value of everything you own minus everything you owe: total assets minus total liabilities. It is the amount you would be left with if you sold all your assets at today’s prices and paid off all your debts.
Should I include my home and my pension in my net worth?
Yes. Your home counts at its current market value, and the outstanding mortgage goes on the liabilities side. Pension savings are assets too, even if you cannot use them until you retire. If you want to see what you could access today, also look at the total without your home and pension.
What does a negative net worth mean?
A negative net worth means you owe more than you own. It is common early in a career, after taking out student loans or right after buying a home with a large mortgage. What matters most is whether the number is going up over time as you pay down debt and build savings.
What is the debt-to-asset ratio?
The debt-to-asset ratio is total liabilities divided by total assets. At 50%, half of what you own is financed by debt. Above 100%, your debts exceed your assets and your net worth is negative. A lower ratio means a bigger cushion if asset prices fall.
How often should I calculate my net worth?
Once a quarter or once a year is enough for most people, because the trend matters more than any single number. Total Worth can track it for you over time, including real estate, cash in several currencies and investments, for free, without an account, with your data kept in your browser.