How to work out your net worth (and why it is your key figure)
Your net worth is the overall mark for your finances: everything you have minus everything you owe. Learn to work it out properly in 20 minutes and use it as a progress tracker.
Your net worth is the overall mark for your finances: everything you have minus everything you owe. Learn to work it out properly in 20 minutes and use it as a progress tracker.
The formula: assets minus liabilities
Net worth = what you have (assets) minus what you owe (liabilities). It is the only figure that sums up your entire financial life in one number: you can earn a lot and have negative net worth, or earn little and be solid. And unlike your salary, it is a figure that depends almost entirely on your own decisions.
- Assets: cash, investments, property, vehicles with resale value
- Liabilities: outstanding mortgage, loans, cards, family debts
- The subtraction can come out negative: that is a starting point, not a sentence
Step 1: list your assets (at a realistic value)
Count the money in accounts and cash, investments at today's market value, pension plans, your home at a realistic selling price (not the one you would like) and vehicles at their resale value. Be conservative with the illiquid: the usual trap is inflating the flat and the car so the number looks good. Personal belongings (furniture, electronics) are better left out: they have almost no real resale value.
- Accounts, deposits, investments and plans: at today's value
- Home: a realistic selling price, not what you paid or what you would like
- If you are torn between two values, pick the lower one
Step 2: list your debts (all of them)
The outstanding capital on the mortgage (from your latest statement, not the original amount), personal and car loans, deferred card balances, purchase financing and money owed to family. Here there is no being conservative or optimistic: what counts is the exact number, which your bank gives you in one click.
- Mortgage: current outstanding capital, not the initial amount
- Revolving cards and financing: usually forgotten, and they weigh
- Informal debts (family, friends) count too
Step 3: read the result without drama
The absolute value matters less than two things: its trend (is it growing quarter on quarter?) and its make-up (how much is liquid and how much is bricks?). Net worth of 200,000 EUR where everything is property and there is 500 EUR in the account is fragile; 60,000 EUR with a liquid buffer and no expensive debt is solid. Negative net worth at the start (a young mortgage, a student loan) is normal: what matters is the slope.
- Trend > absolute value: compare with yourself, not with others
- Watch the liquid part: it is your room for manoeuvre
- Negative is not failure: it is the starting line, measured
Step 4: repeat it every quarter (or let it repeat itself)
Net worth is useful when it becomes a series: the same sum, every quarter, and a chart that rises or warns you. Doing it by hand is 20 minutes plus the discipline not to skip quarters; in mPF it is automatic — you connect accounts, investments and debts, and your net worth updates on its own, with its trend and its make-up always in view.
- The same method every quarter: comparing like with like
- A two-year chart says more than any one-off analysis
- In mPF the series builds itself from your accounts
Frequently asked questions
Do I count my main home in my net worth?
Yes, at a realistic selling price, along with its outstanding mortgage on the debt side. Some people prefer to also work out a version “excluding the main home” to see their real room for manoeuvre, because it is an asset you cannot draw on without moving. The two readings together give the full picture.
And my pension plan, if I cannot touch it until retirement?
Count it: it is yours and it has a daily net asset value. Just remember that it is illiquid wealth with its own tax treatment on withdrawal. If you want to be precise, classify it separately within your long-term assets, the way mPF does when it breaks down the make-up of your net worth.
How often should I work it out?
Quarterly is the right balance: often enough to see a trend, seldom enough not to obsess. Monthly only if an app generates it automatically; by hand it ends up abandoned, and a series with gaps loses its point.
What net worth “should” I have at my age?
The by-age tables doing the rounds are generic references from other countries and other salary paths: treat them as a curiosity, not an exam. The honest indicator is your own series — if your net worth is growing steadily and its liquid part gives you room, you are doing fine, whatever your age.
Doing the subtraction once is fine; seeing it every month changes decisions
Net worth only says something when you compare it with yourself six months ago. mPF adds up your accounts, investments, property and debts and gives you that trend without redoing the spreadsheet.
Free, no card needed. Opens in your browser — also on iPhone and Android.
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