How do I calculate my net worth and track it every month?
Add up everything you own, including cash, bank accounts, investments and the resale value of big items, then subtract everything you owe: loans, credit card balances and overdraft. The result is your net worth. Write it down on the same day each month; the change between two months, not your salary, shows your real progress.
How to do it
- List everything you ownInclude cash, checking and savings balances, retirement and investment accounts, and what big items like a car would sell for today, not what you paid for them.
- List everything you oweInclude every loan balance, credit card balances, any overdraft, and money you owe to people. Use the current balance, not the monthly payment.
- Subtract what you owe from what you ownThe result is your net worth. It can be negative, especially with student or car loans; that is simply your starting point.
- Repeat on the same day every monthWrite the new number next to last month's in a notes app or spreadsheet. The difference between the two is what you actually kept.
Questions that come up
Should I include my house or my car?
Yes, at a realistic resale value, and always include the loan against it too. Use a conservative estimate, since a home or car can't be turned into cash quickly and selling costs money. Some people track two figures, with and without their home, to see how much of their progress is actually spendable.
What if my net worth is negative?
That's common, especially with student loans, a car loan or a recent move. The starting figure matters less than the direction. If the number rises month after month, whether from paying down debt or saving, you are making real progress, even while it is still below zero.
Why can my net worth drop even when I saved money?
Investment values move with the market, so a bad month can hide what you put aside. That's why monthly works better than daily or weekly. If you hold investments, judge the trend over three to six months rather than any single month, and note how much you saved separately.
Full transcript
Raise didn't help? Track net worth, not salary. Add up what you own: cash, accounts, investments, resale value. Subtract what you owe: loans, cards, overdraft. One number, every month. Same salary, next month: fifteen-fifty. That's the line worth watching.