How to calculate your net worth

January 06, 2015

By Pam Leibfried

How to calculate your net worth

In a couple of our 2014 blog posts, we talked about calculating and monitoring your net worth as a valuable step on your financial to-do list. But what exactly does “net worth” mean? What should be included in the calculations? What items are commonly overlooked when calculating net worth?

What is net worth?

Net worth is defined by Investopedia as the “amount by which assets exceed liabilities.” Think of it as the total of everything that you own (assets) minus the total of everything that you owe (liabilities). As an example, you would calculate your net worth listing your home’s current resale value as an asset, and the amount you owe on your mortgage as a liability.

Ballpark vs. comprehensive estimates

For most of us, a ballpark estimate of our net worth is easy to figure out because we have a rough idea of most of the big-ticket items. We know approximately how much our home and vehicle(s) are worth and what we owe on them, we know how much we have in the bank and in retirement funds, and we know how much we owe on our credit cards or student loans. But to get a true, comprehensive calculation of your net worth, you need to include all of your significant assets and liabilities, not just the five or six biggest ones that are top of mind.

Each of us has to decide for ourselves the dollar amount that we think is significant enough to include in our net worth calculation. As an example, when I first calculated my net worth using Alliant’s Personal Financial Management tool, I didn’t bother to include the value of my books. I have a lot of them, but they are mostly discount purchases and paperbacks bought at garage sales, so their resale value doesn’t add up to much. But I have a friend who has complete sets of a couple coffee table book series, some of which are now out of print. They are worth enough that she should probably include them in calculating her net worth.

Commonly overlooked assets and liabilities

Often, although people include their house as an asset, they forget to include the valuable items inside that house. If you have an antique dining room set you inherited from your grandparents, its value needs to be included in your calculations, along with any other antiques or collectibles that are valuable. If woodworking is your hobby and you have a $1,000 lathe in your garage or basement, its resale value is an asset. If you’re a mountain biker or a snowmobiler, include the value of your bike or snowmobile. If you are a quilter (like me) and have an expensive longarm sewing machine (lamentably, unlike me), include its vaue in your list of assets.

Do you owe your brother-in-law for your share of the family’s 2015 season ticket package? Did your sister pay for the cruise that you and your siblings gave your parents as a Christmas present and you still owe her $300 for your share? And don’t forget the amount you owe on your “24 months same as cash” furniture or appliance purchase. If you owe on it, you need to include it in your calculations.

Your Assets:

  • Savings account(s)
  • Health Savings Account (HSA)
  • Balance in checking account(s)
  • Certificate(s)
  • Mutual fund(s) or other non-retirement accounts
  • Stocks
  • Bonds
  • Digital currency (bitcoins, etc.)
  • Value of your home
  • Value of second home or other property you own (Share a vacation cabin or condo with your siblings or parents? Include your stake in its value as an asset, and your portion of the mortgage, if any, as a liability.)
  • Value of vehicles you own
  • Value of personal items:
    • Antiques 
    • Collections
    • Jewelry
    • Works of art
    • Furniture
    • Sports equipment
    • Tools or machinery for household work or hobbies
  • Retirement savings 
    • 401(k)
    • IRA
    • Other retirement savings
  • Value of pension (Use today’s value, not future expected income.)
  • Cash value of life insurance (Not sure of this amount? Check your policy or ask your agent.) 
  • Equity stake in a family business 
  • Money owed to you (current loan balance only)


  • Amount owed on home or other property
  • Auto loans
  • Other personal loans (Include loans from a bank or credit union and money owed to friends/family, if any.)
  • Credit card debt
  • Student loans
  • Amount owed on furniture or appliances, if any

Making it easy to avoid the math

An easy way to keep track of your net worth without doing a lot of math is to use a personal financial management (PFM) tool like the one we offer as part of Alliant Online Banking. Once you’ve entered your assets and liabilities into the PFM tool, any time you want to recalculate your net worth, you can just update the values that have changed. The PFM system does the math for you. For example, when I started researching this article, I revisited the net worth tab on my Alliant PFM page. I hadn’t updated it in a while, so the value of my condo was no longer accurate given the recovery of the real estate market. All I had to do was go to the line for my condo, click on the “edit” link and type in the new resale value. The PFM tool recalculated everything for me.


Personal financial management tools
A Personal Financial Management tool or PFM can help organize your finances and keep track of your spending. Members of Alliant Credit Union get access to a PFM for free in Alliant Online Banking. Alliant accounts are automatically populated into the PFM tool, and you can also include information from other financial institutions by entering the account numbers into PFM. This lets you see a dashboard of all of your account balances and your entire net worth. It also allows you to categorize your expenses to more easily set up and maintain your budget.

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