The Really Quite Good Guide to Net Worth

Learn and Improve Your Net Worth

Net worth is a financial snapshot of your personal wealth.  Simply put it’s the difference between what you own and what you owe.  I would suggest the most important aspect of net worth is not the number itself but rather improving your net worth over time.  Let’s dive in to learn more about net worth and how you can improve yours.

🧙‍♂️Understanding net worth🧙‍♂️

Net worth is a deep look into your financial soul.  Now that I have your attention I do believe net worth to be an important measurement of your financial health. 

When I talk with clients I often refer to net worth as a financial snapshot.  The reason is it’s important to understand that net worth is simply a picture taken at one moment in time of your overall finances.

Net worth includes adding up what you own like cash, retirement accounts, real estate, and subtracting that from what you owe like student loans, credit card debt, or a mortgage.  It’s a good big picture view at how your finances are doing at that point and time.

I want it to be clear that just because you have a negative net worth today does not mean that you are doomed for life.  In fact 10 years ago I had a negative six figure net worth and today I have flipped the switch.  

Many years, debts paid off, increases in income, consistent investing, and that number is a positive six figure net worth today.  A vast improvement and a brief look into how I improved my net worth over time.

Net Worth Example

🇺🇸Barack Obama, Former 🇺🇸President

Putting Emojis on the President's Face

I have to be honest I was really hoping for a Barack Obama emoji

Not long ago Barack Obama was earning income as an Illinois senator and a lecturer at University of Chicago Law School.  Prior to becoming president in 2008 it was reported that Barack Obama’s net worth was close to 1.3 million.  Although this number is very difficult to pinpoint as it’s not a requirement to provide your net worth before swearing in as president.  

How did Barack Obama improve his net worth?

Today that total is estimated to be 40 million.  Over time Barack Obama and his wife Michelle have vastly increased their net worth including writing award winning books, receiving a presidential pension, public speaking events, and the Obama’s founded Higher Ground Productions and signed a production deal with Netflix. 

As income increases it’s very likely the Obama’s will continue to invest and grow their net worth.

🏃Quick Takeaway🏃

Net worth is not something to obsess over.  However it is a very good measurement of your financial strength.  For example when I was deep in debt my financial wellness would be considered poor. 

I owned almost nothing and owed a large amount of debt.  Today I own and invest in many things and owe almost nothing.  Big change. 

As you can see to improve your net worth one would need to increase your income which would allow you the opportunity to save, own, and invest more.  Another way would be to decrease your debt by paying off credit card debt, student loans, etc. 

The best of both worlds can allow you to improve your net worth rapidly.

💰What is included in your net worth?📈

Assets and Liabilities.  Let’s dig into each one.


Assets are really anything you own that has value.  A really easy one to calculate is your checking and savings accounts as these have a cash value or commonly referred to as liquid assets. 

Most assets that have value are included in a few simple categories.

  • Liquid assets
  • Stock and retirement accounts
  • Real Estate
  • Motor vehicles
  • Business
  • Personal property

401 (K) accounts, the home you live in, the car you drive, the small business you own, the jewelry on your finger are just a few examples of items found within these categories.

While net worth can be used to literally place value on every item you own it’s unlikely you would take the time to add up how much your clothes, furniture, or collection of Michael Jordan basketball cards would total.  

Personally I don’t add anything into my net worth calculation that I can’t easily place a monetary value on or any item less than $1,000. 

In fact the list of items that I don’t include in my net worth which I track using Personal Capital is pretty extensive actually.  I don’t add our 2007 Toyota Sequoia, any personal items in the house, or my business and website Even Steven Money despite these items having some monetary value.


Liabilities are what you owe to other people and/or companies.

The most common are loans like a mortgage or car which are also listed under assets.  However student loans, credit card, and medical debts are also included but are only considered a liability not an asset.  There are certainly other kinds of debt such as money owed to the IRS, a family member, or judgments like child support and alimony.

Liabilities are very common, they are not necessarily bad but in many cases necessary.  Most large purchases like a home, car, or financial education are difficult to save and pay for in one lump sum.  Instead many individuals borrow the money and pay this back over time. 

Chances are if you live in and own a home you have a liability.

[tweetshareinline tweet=”Net worth tends to ebb and flow over time. ” username=”EvenStevenMoney”] Most individuals just starting out especially as early college graduates do not own many assets if any at all.  Negative net worth is more common as student loans are not an asset, credit card debt is a result of over spending, and a new car depreciates in value as soon as you drive it off the lot.

With higher income comes the propensity to pay down debt, invest for retirement, and buy a home.  Sure higher income also increases your propensity to have expensive Sunday brunch, buy new fancy designer clothes, and take a vacation to Fiji. 

Instead add in some relative discipline to spend less than you earn and your net worth tends to flow in an upward manner.  Think expensive Sunday brunch and invest in your retirement.

🔎Why does net worth matter?

Frankly I don’t think the actual net worth number matters.  What I think matters about net worth is the constant improvement over a long period of time as it relates to paying down debt and investing in assets that tend to appreciate over time.

If my net worth was the same in 2020 as it was in 2010 it would be of great concern.  As a personal finance nerd🤓 I might even cry a little.  Hit up the mint chocolate chip ice cream and gummy bears before I woke up from my sugar coma and completely understood that change was needed.

Ultimately it would mean that I was spending more than I earned.  Not investing in assets that went up over time and most likely buying assets that depreciated in value like most motor vehicles and personal items within my house.

My net worth is not who I am and it certainly shouldn’t be for you either.  It’s simply a measurement to see how we are doing financially.

👴What is a good net worth by age?🧓

Honestly this is one of my least favorite questions and estimates.  Please don’t compare yourself to others.  Instead compare your previous net worth or financial snapshot to your new one.

It’s like jumping on Instagram and comparing myself to a fitness model.  It does me no good.  In fact it makes me not like Mr. Fitness model and he did nothing wrong.  I mean sure the man has wash board abs but can I really not like him because of this…….rhetorical question moving on.

Don’t compare your net worth to other people.  Let me save you a lot of pain and agony.  Plus do you really think that the guy who puts his wealth on display owns the Ferrari in front of the mansion next to the fountain.  Me either.

I would suggest checking in your net worth every three (3) to 12 months.  The reason I suggest to track your net worth is we are looking to see the improvement of your net worth over time. 

J. Money a personal finance card carrying veteran has tracked his net worth since the beginning of his Mohawk hair style.  He didn’t care what the number was but rather that it was improving year over year.  I mean that guy became a millionaire, he was doing something right.

💵How do you calculate net worth?

The basic formula is Total Assets minus Total Liabilities equals Net Worth.

By searching online you will find a vast array of net worth calculators.  As I mentioned before it’s more important to track your net worth so I recommend using a spreadsheet like the one I offer by signing up below or a tracking tool like Personal Capital, recently acquired by Empowerment Capital.

While cash and investments are often tracked instantly or at least on a daily basis not all assets and liabilities are as easy. 

For example real estate is only an estimate often provided by real estate websites like Zillow or Redfin.  A more accurate measurement is from a realtor who will provide comps using the Multiple Listing Services or MLS and a comparative market analysis or CMA.

Real estate net worth is truly an estimate until the house is sold and commissions along with taxes are paid.  It’s OK to provide an estimate of these types of assets as real estate for example is more commonly tracked year over year rather than daily like a cash balance.

Are you tracking your net worth?

This post was inspired by What is Net Worth?.  The article is found at Robinhood a commission free trading platform.  While I don’t actually use the platform, I do subscribe to Robinhood Snacks and suggest you do the same if you are interested in learning more about investing.  I’m not being paid for this, but I should be.

Net Worth FAQ

❓How do you figure out your net worth?

  1. Add up your assets
  2. Subtract your liabilities
  3. Presto, Chango, out comes your net worth

❓Is net worth monthly or yearly?

Net worth can be calculated at any given moment in time.  Most people and well known publications like Forbes calculate the estimated net worth of individuals on a yearly basis.

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Lebron James aka King James aka Bron Bron

❓Does net worth include income?

Despite what many people believe income is not included in net worth.

Just because Four-time NBA MVP LeBron James of the Los Angeles Lakers earned 88.2 million dollars in salary and endorsements this past year does not mean this is included in his net worth.

Lebron James will see far less than the 88.2 million he earned.  He must pay taxes, agents, staff, personal expenses, and a vast array of other expenses.  However the amount Lebron holds in liquid assets like cash, investments, business partnerships, and more are all included in his net worth.

❓Want to Improve Your Net Worth?

Schedule a 20-30 minute phone call to see if working together is the right fit for both you and me, my appointment availability is below.  I want to help everyone, but I only have time for a select few.    Want to learn more about working with me, then check out my financial coaching page to learn more.

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