Most people track their income. Fewer track their net worth, which is exactly why it’s such a useful number to know.
Your salary tells you how much is coming in. Net worth tells you whether any of it is sticking around. It ties together everything you own and everything you owe into one figure, and watching it move over time is a clearer measure of financial progress than income alone.
What net worth means
Net worth is simple: assets minus liabilities.
Assets are everything you own that has value. Liabilities are everything you owe. Subtract one from the other and you get your net worth.
If you have $12,000 / £10,000 in savings and investments and $7,000 / £6,000 in debt, your net worth is $5,000 / £4,000. If your debts outweigh your assets, your net worth is negative. That’s not unusual in your 20s, just a starting point, not a verdict.
The number itself matters less than the direction it’s moving. Someone at -$20,000 who’s paying down debt and putting money into investments every month is in a better position than someone sitting at zero doing nothing. Net worth is a snapshot. What you do next is what changes it.
What counts as an asset
An asset is anything you own that holds monetary value.
Cash and savings are the most straightforward: current accounts, savings accounts, cash ISAs, high-yield savings accounts. Whatever’s sitting in the bank, you count it.
Investments include brokerage accounts, stocks, bonds, ETFs, index funds, Roth IRAs and traditional IRAs (US), Stocks & Shares ISAs and SIPPs (UK). Use the current market value, not what you paid for them.
Retirement accounts count too. In the US, your 401(k) or 403(b) balance is an asset even if you can’t touch it for decades. In the UK, pension funds are technically assets but with access restrictions. Many people include them, though it’s worth noting them separately since they’re illiquid until at least 57.
If you own a home or other real estate, the current market value is an asset. What you still owe on the mortgage is a liability. Only the equity, the gap between the two, counts toward your net worth.
A car has value but depreciates fast. You can include it at its current trade-in value, though for most people it makes a small difference and gets smaller every year.
Other assets: a business you own, valuable items like jewellery or art, money owed to you. If it can be converted to cash and has a reasonably clear value, it goes here.
When you’re younger, this list is usually short: savings account, maybe some investments, not much else. That’s fine. The point is to give yourself a baseline.
What counts as a liability
A liability is any debt you owe.
Consumer debt is the most common: credit cards, overdrafts, personal loans, buy-now-pay-later balances. These often come with high interest rates, which is why paying them down moves your net worth faster than almost anything else.
Student loans are worth thinking about separately. In the US, federal and private student loans are liabilities and should be listed at the current outstanding balance. In the UK, Plan 2 and Plan 5 loans work differently: they’re repaid as a percentage of income above a threshold and written off after 30–40 years, so many people leave them out of the calculation since they may never fully repay them. If you’re on a private loan or actively paying one down, include it.
Car finance and mortgage balances both count. For the mortgage, list the outstanding balance, not the original loan amount. Your home’s market value is the asset; what you still owe is the liability. The difference is your equity.
Everything else: money borrowed from family, unpaid tax bills, anything you legally owe.
How to calculate your net worth
This takes about 20 minutes the first time.
- List every asset with its current value. For savings and investments, pull the live balances. For property, use an estimate based on comparable recent sales in your area. Rightmove or Zoopla work for the UK; Zillow for the US.
- List every liability with its current outstanding balance. Log into each lender or check your last statement.
- Add up the assets. Add up the liabilities. Subtract liabilities from assets.
Here’s a simple format to work from:
| Category | Amount |
|---|---|
| Savings | $4,000 / £3,200 |
| Investment account | $8,000 / £6,400 |
| Pension / retirement | $3,500 / £2,800 |
| Car (trade-in value) | $6,000 / £4,800 |
| Total assets | $21,500 / £17,200 |
| Credit card balance | -$1,200 / -£960 |
| Car loan | -$5,500 / -£4,400 |
| Student loan | -$18,000 / -£14,400 |
| Total liabilities | -$24,700 / -£19,760 |
| Net worth | -$3,200 / -£2,560 |
Negative net worth is common at this age, particularly with student debt. The goal is to move it upward, not to start positive.
What the average net worth looks like by age
The Federal Reserve’s Survey of Consumer Finances shows median net worth for Americans under 35 is around $39,000, with a mean of around $183,000. The mean gets pulled way up by a small number of very wealthy young people, which is why median is the more honest benchmark.
In the UK, the ONS Wealth and Assets Survey puts median household wealth for those under 35 at around £26,000–£35,000, though this varies by region and whether property is in the picture.
Both figures include property equity, which is why homeowners in their 30s tend to have significantly higher net worth than renters of the same age. If you’re renting, don’t read too much into that gap. Renting vs buying involves trade-offs the net worth number alone doesn’t capture.
What moves net worth in the right direction
Net worth grows when you increase assets, decrease liabilities, or both.
Paying off high-interest debt is usually the fastest lever early on. Every £1 / $1 of credit card debt cleared increases your net worth by the same amount, and it stops compounding against you. How credit card interest actually works explains why clearing high-rate balances is often the best guaranteed return available to you.
Investing consistently builds the asset side. A monthly budget that routes money to investments before you have a chance to spend it is the most reliable way to make this happen. Even £100 / $100 a month in index funds compounds meaningfully over years.
Not inflating your lifestyle as income grows is underrated. If your spending rises as fast as your salary, your savings rate stays flat and your net worth barely moves. Lifestyle creep is how a lot of people on decent incomes end up with surprisingly little to show for it.
Time does more work than almost any single behaviour change. An investment account worth $10,000 / £8,000 at 25 is worth meaningfully more at 45 even if you never add another pound or dollar, because compound growth accumulates on itself.
How often to check it
Once a quarter is enough for most people. Monthly if you’re actively paying down debt or building savings quickly and want the motivation.
You’re not looking for a big number. You’re looking for a consistent upward trend. Net worth drops during large purchases, market downturns, unexpected expenses. That’s normal. The question is whether the line, over a year or two, is moving up.
A spreadsheet with a date and a net worth figure each quarter is all you need. Some people use apps: in the UK, Emma and Moneybox pull account balances automatically; in the US, Empower (formerly Personal Capital) and Copilot do the same. However you track it, checking periodically makes you more conscious of decisions that affect the number.
Net worth isn’t the whole story
Net worth measures wealth, not liquidity. A high net worth concentrated in illiquid assets (a house, a pension that can’t be touched for 30 years) doesn’t help if you can’t cover an unexpected bill next week.
That’s why the emergency fund matters even when net worth looks fine. Liquidity and net worth are different things, and you need both.
The most useful thing about calculating net worth is that it forces you to look at everything at once. Most people manage their finances in silos: savings over here, debt somewhere else, investments in another tab. Net worth puts it on one page. You can see whether the overall picture is improving, or whether one corner of it is quietly dragging everything down.
Calculate it once. Check it again in three months. The trend will tell you whether you’re on track.