How to calculate your net worth

Author picture

Written by


In the wealth management industry, clients are often asked about their net worth, but nobody ever seems to know the answer, or more importantly, why that number even matters.

Net Worth = Assets – Liabilities. This is used as a general measure of wealth.

Our experience indicates that net worth is a measure used far more often by older generations compared to younger generations today. Baby boomers and even some Gen X tend to focus on net worth when listing the “goals” they are trying to achieve. This makes sense, as that is the group which is more concerned with building lasting wealth and accumulating assets such as real estate and other big ticket items. Younger generations tend to focus less on accumulation, and more on experiencing life. But, to experience life, you need cash flow, which corresponds to income. Therefore, younger generations are likely to have higher monthly expenses, like Uber costs, but are less likely to own a car.

So which one should you focus on? We believe both are important. Being constantly aware of your net worth helps you to understand the impact of debt you’re taking on, when it comes to your overall financial picture. Understanding your net worth will factor into most major financial decisions, and it’s a number that’s going to come up anytime you consult a financial professional. This includes buying a home, obtaining any kind of loan (including a business loan), getting married, applying for some benefits and much more. As such, we recommend that every altruWisdom member know their net worth and understand what the calculation looks like.

Here are the steps to calculating your own Net Worth:

Start by adding up your assets

Liquid assets: Cash in the bank, cash out of the bank, T-bills, money market funds, and anything else with a cash equivalent. This means it is very liquid and can be spent on anything when sold.

Investment Accounts: This will include employer and personal Registered Retirement Savings Plans as well as other investment accounts including your TFSA and more.

Real estate: The market value of your primary residence and any other real estate you own. If it is partial ownership, include the portion you own. Do not count loans you have co-signed, remember it only counts if you are on title. You should probably be conservative in your estimates of the value, check out real estate listings if you don’t have a recent appraisal.

Business assets or equity: If you own a business or part of one, that value belongs here. It is tricky as there is a big difference between accounting value and market value of a business or its assets. Speak to your accountant, and keep in mind that these assets are not convertible into cash.

Personal assets: This can include cars, art, jewelry and other personal effects. Unless you have a substantial collection and could foresee true value and the assets can be sold, we don’t recommend including this in your calculation.

Personal loans that you have yet to receive: These are loans you have made to family or friends, or a business. These can only be included if you actually have a plan of repayment that is likely to materialize.

Other assets: Anything else that is an valuable asset that isn’t included above. This category includes cash value built up in some permanent insurance plans.

Next, add up your liabilities

Mortgages: Be sure to count your primary residence mortgage, any second mortgages, lines of credit on the home and other mortgages for other properties.

Other loans: This could be any instalment loans for cars, furniture, boats, motorcycles, or other possessions. Also any personal lines of credit, student loans you are responsible for (including spouses and children), credit car debt, business loans and other personal liabilities.

Other liabilities: This can include medical debts, tax liabilities, or any other obligations. This could also include spousal and child support, if they are a total amount owing.

Final Tally

Once you have tallied up the complete numbers for both your assets and liabilities, subtract your liabilities from your assets, and that will give you your net worth.

Remember whole idea of calculating your net worth is to establish a baseline from which you can identify how to improve your financial situation. It helps you set the plan for where your future net worth should be. Knowing the number is powerful, as it gives you a guideline of when you are ready to take on more assets or more liabilities.

Learn to develop a new relationship with money by completing our Overhaul Your Financial Behaviour Checklist.

Related Post


How do our emotions affect our money decisions? In a bigger way than we expect! In this article, we dive into ways that our…


How do our emotions affect our money decisions? In a bigger way than we expect! In this article, we dive into ways that our…


This is a set of the most impactful and helpful questions to ask in order to identify your partner’s money story and complete a…