Personal Net Worth Calculator

Net Worth Formula:

\[ NW = \text{Total Assets} - \text{Total Liabilities} \]

Net Worth (NW):

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1. What is Personal Net Worth?

Personal Net Worth (NW) is a measure of an individual's financial health, calculated as the difference between total assets and total liabilities. It represents what you own minus what you owe.

2. How Does the Calculator Work?

The calculator uses the simple net worth formula:

\[ NW = \text{Total Assets} - \text{Total Liabilities} \]

Where:

\( \text{Total Assets} \) — The sum of all your valuable possessions (cash, investments, property, etc.)
\( \text{Total Liabilities} \) — The sum of all your debts and financial obligations

Explanation: A positive net worth means your assets exceed your liabilities, while a negative net worth means you owe more than you own.

3. Importance of Net Worth Calculation

Details: Tracking net worth over time helps measure financial progress, assess your ability to take financial risks, and plan for major life events like retirement.

4. Using the Calculator

Tips: Enter all your assets (bank accounts, investments, real estate, vehicles, etc.) and all liabilities (mortgages, loans, credit card debt, etc.) in USD. Use current market values for accurate calculation.

5. Frequently Asked Questions (FAQ)

Q1: What counts as an asset?
A: Assets include liquid assets (cash, checking/savings), investments (stocks, bonds, retirement accounts), real property (home, vehicles), and valuable personal property.

Q2: What counts as a liability?
A: Liabilities include mortgages, car loans, student loans, credit card balances, personal loans, and any other outstanding debts.

Q3: How often should I calculate my net worth?
A: Most financial experts recommend calculating net worth at least annually, though quarterly or monthly tracking can provide better insights into your financial trends.

Q4: What is a good net worth by age?
A: While benchmarks vary, a general rule is your net worth should be at least (age × annual income)/10. However, this varies based on individual circumstances.

Q5: Should I include my home in assets?
A: Yes, but use the current market value (not purchase price) and remember to include the mortgage as a liability.