โ ASSETS โ What You Own
โ LIABILITIES โ What You Owe
Asset Breakdown
Liability Breakdown
Understanding Your Net Worth
Net worth is the single most comprehensive measure of your financial health. Unlike income (which measures flow) or credit score (which measures creditworthiness), net worth measures your actual accumulated wealth: everything you own minus everything you owe. A high income with high spending and debt produces a low net worth. A modest income with consistent saving and investing builds substantial net worth over time.
The formula is straightforward: Net Worth = Total Assets โ Total Liabilities. Assets include all cash, investments, retirement accounts, property, and valuable possessions. Liabilities include all debt โ mortgages, car loans, student loans, credit cards, and any other money you owe. The result is your true financial position at a point in time.
Most financial experts recommend tracking net worth monthly or quarterly. The specific number matters less than the direction of change โ consistent growth over time indicates healthy financial behavior. For context, the median US household net worth is roughly $192,000, though this varies enormously by age: those under 35 average about $76,000, while those 65-74 average over $1.2 million, reflecting decades of compound growth.
What's a "Good" Net Worth at My Age?
- 20s โ Just getting started. Focus on eliminating high-interest debt, building a 3-6 month emergency fund, and starting retirement contributions. Net worth above $0 is already progress.
- 30s โ Aim to have 1x your annual salary saved for retirement by 30, 2x by 35. Net worth should be growing meaningfully as income rises and debt decreases.
- 40s โ Target 3-6x annual salary in retirement savings. At this stage, compound growth begins to do heavy lifting. Home equity often becomes a major asset.
- 50s and 60s โ Final accumulation phase. Target 7-10x your annual salary by retirement. Review and rebalance investments. Begin planning retirement income streams.