# Calculate Your Net Worth [+ Free Work Sheet]

When you hear the term ‘net worth’, what is the first thing you think of? For most people, it’s celebrities, athletes, or other wealthy people. It is a very common misconception that net worth is simply how much money a person has in their bank account. However, there is so much more to net worth than simply your bank account. Net worth can be defined as the value of all the non-financial and financial assets owned by an institutional unit minus the value of all it’s outstanding liabilities. Put in simple terms, net worth is what you own minus what you owe.

The basic formula to calculate net worth is: (assets – liabilities = net worth).

This means if your assets exceed your liabilities, you have a positive net worth. However, if your liabilities exceed your assets, you have a negative net worth. This math is very simple to calculate and it is essential you fully understand your net worth.

##### Assets and Liabilities

To fully understand how to calculate your net worth, it is important to understand what assets and liabilities are.

Assets are defined as resources with economic value that a person owns. In simple terms, an asset is something that can now, or in the future, make you money if you were to sell it or otherwise provide a benefit. Common assets include securities (stocks, bonds, index funds, etc.), rental properties, cash, or personal property (art, jewelry, vehicles, etc.).

Liabilities are defined as financial debts or obligations (something you owe to someone else). Common liabilities include mortgages, student loans, consumer debt, car notes or anything else you make debt payments on.

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1. Justin
March 31, 2020 / 6:33 am

Hey there ðŸ™‚

Your wordpress site is very sleek – hope you don’t mind me asking what theme
you’re using? (and don’t mind if I steal it?

:P)

I just launched my site –also built in wordpress like yours– but the theme slows (!) the site down quite
a bit.
Keep up the good work– and hope you all take care of
yourself during the coronavirus scare!

• Kate
Author
June 3, 2020 / 6:56 pm

Hi Justin!
Thank you so much! ðŸ™‚
I use the Maryline theme by Pipdig. He has several themes – all simple and super easy to use. I have a few of them – they’re all great!