How to calculate your net worth

Net worth is the most honest figure in a financial life. It does not measure what you earn or what you appear to have. It measures what remains.

It is calculated with a subtraction: everything you own, minus everything you owe.

The formula fits in one line. What matters is doing it well and interpreting it calmly.

What net worth is

Assets minus liabilities. Assets are what you own that holds value: accounts, investments, property, a car. Liabilities are what you owe: mortgages, loans, debts.

A salary measures a flow. Net worth measures the whole. Two people with the same salary can have opposite financial lives, and a high income can coexist with a fragile net worth for years without anyone noticing.

That is why net worth is a better starting point than income: it forces you to look at everything at once.

Step by step

1. List your assets, at current value. Not at purchase price. Current and savings accounts. Investments: stocks, funds, ETFs, crypto. Fixed income: deposits, bonds, bills. Equity compensation, vested portion only. Real estate. Vehicles.

2. List your liabilities. The outstanding mortgage, not the original one. Personal and car loans. Any debt with a name attached.

3. Convert everything to one currency and subtract. If you hold assets in several currencies, choose a main one and convert the rest. Then: assets minus liabilities. That is the figure.

An example

A flat valued at €250,000 with €140,000 outstanding on the mortgage. €30,000 in investments. €8,000 across accounts. A €6,000 car loan.

Assets: 250,000 + 30,000 + 8,000 = €288,000. Liabilities: 140,000 + 6,000 = €146,000.

Net worth: €142,000.

Notice something: most of this figure depends on one estimate, the flat’s. That does not invalidate it. It only asks for prudence.

The nuances that change the figure

Shared ownership. If you own half of a property, count your half, of the value and of the mortgage.

Illiquidity. A flat has no exact price until it sells. Use a prudent estimate and update it a few times a year. Precision to the cent is an illusion; the honesty of the estimate is not.

Equity compensation. Unvested RSUs and options are not yours yet. They are future, not net worth. Count what has vested and treat the rest as context.

Vehicles. They depreciate. Be conservative.

Small debts. They count all the same. A net worth that ignores the uncomfortable debts is not a measure; it is a postcard.

How often to look at it

Not every day. Net worth moves slowly, and that slowness is information: it filters out market noise and lets the direction show.

A monthly or quarterly review is enough. What is valuable is not looking often; it is measuring the same way every time, for years. Consistency turns a figure into a story.

Interpreting it calmly

A decrease is not always bad news. Markets breathe, and a large purchase moves the figure without changing your real situation. An increase is not always your own doing either.

The useful question is not “how much did it change this month?”, but “does the direction of the last few years reflect my decisions?”.

Net worth is not a grade to pass. It is a map. And maps are not judged: they are consulted.

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If you would rather not keep this account in a spreadsheet, Prisvera keeps it for you: every asset class in its place, shared ownership counted properly, currencies converted. And only you can see your figures: they are encrypted end to end.