Net worth: a single number for where you actually stand
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Key takeaways
Net worth is the total value of everything owned minus everything owed.
It’s a more complete measure of financial position than income alone, since income says nothing about debt or existing assets.
Net worth can be negative, particularly early in adulthood or shortly after a major purchase like a home.
Tracking net worth periodically, rather than obsessing over daily fluctuations, shows meaningful long-term progress.
Assets and debts held across more than one country should both be included in an accurate net worth calculation.
Net worth is a single number capturing everything owned minus everything owed. Here’s how to calculate it and why it matters more than income alone.
What is net worth?
According to the Federal Reserve(opens in new window), wealth, or net worth, is the difference between the value of assets owned by a household and the value of the liabilities, or debt, held by that household, a definition the Federal Reserve tracks nationally through its triennial Survey of Consumer Finances. It’s calculated by adding up the value of bank accounts, investments, property, and other valuable possessions, then subtracting any outstanding debt, including credit cards, loans, and mortgages, leaving a single figure representing an actual financial position at a given point in time.
Why net worth matters more than income alone
Income shows how much money is flowing in over a given period, but it says nothing about how much has actually been accumulated or how much debt is being carried. Two people with identical incomes can have wildly different net worth figures depending on their savings habits, debt levels, and how long they’ve been building their financial position, which is exactly why net worth, not income, is generally considered the more complete measure of someone’s actual financial standing.
How to calculate your own net worth
List every asset owned with its current, realistic value: checking and savings account balances, investment accounts, retirement accounts, property, and any other significant possessions worth including. Separately, list every debt owed: credit card balances, student loans, auto loans, any mortgage balance, and other outstanding obligations. Subtracting total liabilities from total assets gives net worth, a number that can be positive, negative, or exactly zero depending on the specific financial situation.
For a broader set of practical steps that build toward a stronger net worth over time, see these 7 smart financial moves every immigrant should make(opens in new window).
Quick calculation
Imagine assets include an illustrative 5,000 units in savings, a 3,000-unit retirement account balance, and a vehicle worth 8,000 units, totaling 16,000 units in assets. Liabilities include a 4,000-unit remaining auto loan balance and 2,000 units in credit card debt, totaling 6,000 units. Subtracting 6,000 units in liabilities from 16,000 units in assets gives a net worth of 10,000 units, a single, concrete figure that can be tracked and compared against a future calculation to see whether overall financial position is genuinely improving over time.
Why net worth can be negative, and why that’s not necessarily alarming
A negative net worth, where debts exceed assets, is genuinely common, particularly for recent graduates carrying student debt, or anyone who recently took on a mortgage for a home whose full value hasn’t yet been reflected through paid-down principal. A negative net worth isn’t inherently a crisis; what matters more is the overall trend over time, whether net worth is steadily improving as debt is paid down and assets are built, rather than the specific number at any single point in time.
Including cross-border assets and obligations in your net worth
For immigrants with financial ties in more than one country, an accurate net worth calculation needs to include assets and debts on both sides, a family property back home, savings held in another country’s bank, or an outstanding debt owed there, converting each to a single common currency for the calculation to be meaningful. Leaving out assets or debts in a home country simply because they’re less top-of-mind day to day produces an incomplete, potentially misleading picture of actual overall financial position.
Net worth and your immigration-related expenses
For newcomers, certain immigration-related costs, visa or petition fees, legal representation, or travel expenses tied to the immigration process itself, are sometimes overlooked in a net worth calculation, either because they were paid long ago or because they don’t fit neatly into a standard asset or liability category. If any of these were financed through debt still being repaid, that remaining balance belongs in liabilities for an accurate calculation. Making sure a net worth picture reflects the full financial reality of an immigration journey, not just more recent, day-to-day finances, gives a more honest and complete number to track over time.
Net worth and joint finances with a spouse or partner
Sharing finances with a spouse or partner requires deciding whether to calculate net worth jointly or separately, since a shared asset or debt should only be counted once in a combined calculation, not duplicated across two separate individual tallies. Agreeing on this approach together, and updating the calculation consistently the same way each time, keeps shared financial tracking accurate and meaningful over time.
Net worth as a long-term motivator, not a daily check-in
Because net worth is best tracked infrequently, some people find it helpful to pair each calculation with a brief written reflection on what changed and why, building a kind of personal financial history over time. Looking back at several years of these snapshots together often reveals a much clearer, more encouraging growth story than any single year’s number would show on its own.
Common questions about net worth
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How often should I calculate my net worth?
Checking once or twice a year is generally sufficient for most people, since net worth typically changes gradually, and checking too frequently, like monthly or weekly, can create unnecessary anxiety over normal, short-term fluctuations in asset values that don’t reflect any meaningful change in actual financial trajectory.
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Should I include the value of my home in my net worth?
Yes, generally, along with the outstanding mortgage balance as a liability, since both together reflect actual equity in the property, which is the portion that genuinely belongs to the owner as opposed to the lender.
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What’s a “good” net worth for my age?
There’s no single universal benchmark that applies fairly to everyone, since net worth depends heavily on factors like income history, where someone lives, family circumstances, and how recently they may have immigrated and started building assets in a new country. Tracking a personal trend over time is generally more useful than comparing a specific number against a generic benchmark.
In Summary
Net worth provides a single, honest number capturing actual financial position, everything owned minus everything owed, and tracking it over time, including any assets or debts spanning more than one country, shows whether an overall financial trajectory is genuinely improving. See how much you can save on your next transfer as part of the broader picture that shapes a growing net worth.
This publication is provided for general information purposes only and is not intended to cover all aspects of the topics discussed herein. This publication is not a substitute for seeking advice from an applicable specialist or professional. The content in this publication does not constitute legal, tax, or other professional advice from Remitly or any of its affiliates and should not be relied upon as such. While we strive to keep our posts up to date and accurate, we cannot represent, warrant, or otherwise guarantee that the content is accurate, complete, or up to date.