How to Calculate Net Worth and Why It Matters

Your net worth is calculated as the value of all your assets, minus the value of your liabilities. One way to think about it is if you could sell everything you own today and use the proceeds to pay your debts, the dollar value you have left would be your net worth.

Many people use their net worth as an indicator of their financial health. However, there is not a specific number that everyone should be striving for. Think of it as a big-picture snapshot of a moment in time that can help you see where you are on your financial journey.

Tracking your net worth year-over-year can be helpful in evaluating your financial well-being. By comparing your current year’s net worth to your historical amounts, you have the ability to see which direction your net worth is trending.

Our net worth calculator can provide an overview of your current net worth as an input to your overall financial plan.

Getting ready to calculate your net worth?

To prepare to calculate your net worth, first take an inventory of your current assets (what you own) and current liabilities (what you owe).

Income is not included in your net worth calculation. Although income may help you understand your cash flow, income alone may not be the best indicator of your financial well-being. Understanding your net worth takes into account both sides of your personal balance sheet, your assets, and liabilities.


So, what should you include in the assets category? Assets include cash as well as anything that you own that has a tangible value and that you could sell. Non-cash assets can include the value of your home, investments such as stocks, bonds or mutual funds, as well as your valuable personal property such as collectibles or jewelry. If you own a business, the business's value should also be included in your net worth calculation.


Figuring out your liabilities is the next step in calculating your net worth. Liabilities include any enforceable debts or financial obligations assigned to you. Some examples of liabilities include outstanding credit card balances, mortgages, student loans, car loans and rent payments. If you own a business, liabilities associated with the business should also be included in your net worth calculation.

Net Worth Calculation

Once you have an inventory of all your assets and liabilities, you can calculate your net worth. To do this, simply subtract the total amount of liabilities from the total amount of assets. This dollar number is your net worth and can be used to compare to past or future years’ net worth.

Managing your net worth

  • Grow your savings
    One way to do this is to check out a range of saving and investment products to see which ones would be a good choice for your circumstances based on your goals, time horizon and risk tolerance.
  • Reduce your discretionary spending
    Our budget review tool can be used to review your current expenses and might uncover some opportunities for you where you could consider cutting back on your spending.
  • Consolidate your existing debt
    Consider a debt consolidation loan which could make paying off your existing debt easier for you. To get a sense of what a debt consolidation could do for you, try the TD Debt Consolidation Calculator.

We can help you plan ahead

Calculating your net-worth is useful to help you understand your financial well-being, so why wait? You'll be able to make more informed decisions to help you with your financial goals.

If you have questions about calculating your net worth or how to use this information, book an appointment to speak with a TD advisor.


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