What Is Net Worth?

In 2022, the Federal Reserve surveyed roughly 6,500 American families and found that the median household headed by someone under 35 had a net worth of about $39,000.¹ The median family headed by someone between 65 and 74 had accumulated roughly $409,900.¹ That gap of more than $370,000 did not come from luck. It came from decades of one number moving consistently in one direction. That number is net worth, and it is the closest thing personal finance has to a final score.

The short answer

Net worth is total assets minus total liabilities.² Assets are everything you own that has monetary value: the balance in your checking account, the equity in your home, the investments sitting in your brokerage account, the current market value of your car. Liabilities are everything you owe: the remaining mortgage balance, the student loan statement, the credit card balance you have not paid off yet. Subtract the second from the first and you have your net worth. A positive number means you own more than you owe. A negative number means the reverse, which is common early in life and not a crisis in itself, but it does demand attention.

What counts and what does not

Let's start with what goes on the asset side, because a few items trip people up.

Cash and cash equivalents are the cleanest: checking accounts, savings accounts, money market accounts, certificates of deposit. These are liquid assets, meaning you can convert them to spending power today without a penalty or a waiting period.

Investment accounts come next: brokerage accounts, individual retirement accounts (IRAs), 401(k) and 403(b) accounts, and any stock or bond holdings outside of a tax-advantaged account. The value you record is the current market value, not what you paid in.

Real estate counts at fair market value, not your purchase price. If you bought a home for $280,000 in 2018 and it is worth $420,000 today, you record $420,000. The outstanding mortgage balance goes on the liability side.

A car is an asset, yes, but a depreciating one. A vehicle worth $18,000 today will be worth less next year. Record the current market value, not what you paid at the dealership, and keep the auto loan on the liability side.

The items that do not belong: your human capital (future earning potential), household goods and furniture in most practical calculations, and anything with no clear resale market. While these technically hold value, including speculative or illiquid personal property inflates your net worth number without meaningfully changing your financial position.

The income illusion: why a high salary is not the same thing

This is the piece most people miss. Income is a flow: money moving through your account each month. Net worth is a stock: what has actually accumulated after the flow has passed through.

Consider two people, both earning $100,000 a year. Person A has been living below her means for a decade. She has $180,000 in retirement accounts, $60,000 in a brokerage account, a home worth $350,000 with a $200,000 mortgage remaining, and $15,000 in credit card and auto debt. Her net worth is $395,000. Person B earns the same salary but has kept pace with lifestyle inflation throughout his career. He has $30,000 in retirement savings, $8,000 in a checking account, rents his apartment, and carries $185,000 in student loans plus $22,000 in credit card balances. His net worth is negative $169,000.

Same income. More than $560,000 apart in financial position.

This is why the Federal Reserve tracks net worth rather than income when studying household financial health.¹ Income tells you about this year. Net worth tells you about every year up to this one.

Where most Americans actually stand

The Federal Reserve's 2022 Survey of Consumer Finances (SCF) is the most rigorous look at household balance sheets that exists in the United States, conducted every three years since 1989.³ The 2022 results, published in October 2023, show median family net worth rising to $192,700, a 37 percent increase over 2019 after adjusting for inflation.¹

Broken down by age of the family head, the SCF 2022 data shows the progression:¹

• Under 35: median $39,000, mean $183,500
• 35 to 44: median $135,300, mean $549,300
• 45 to 54: median $247,200, mean $975,800
• 55 to 64: median $364,500, mean $1,566,900
• 65 to 74: median $409,900, mean $1,794,600

The gap between median and mean at every age bracket is worth noting. The mean is pulled sharply upward by households at the top of the distribution, while the median represents the family sitting exactly in the middle. The median is the more useful benchmark for most people.

If your net worth is below the median for your age group, that is not a verdict. It is a data point. The trajectory matters more than the snapshot.

Liquid net worth: the number within the number

Total net worth and liquid net worth are two different things, and conflating them can create a false sense of security.

Imagine a household with $800,000 in net worth: a $500,000 home with a $300,000 mortgage, $200,000 in a 401(k), and $30,000 in a savings account. Their total net worth is $430,000. Their liquid net worth, meaning assets they can access without selling a property or triggering a retirement-account penalty, is $30,000. In a job loss scenario, that household has about three to four months of runway, not the half-million-dollar cushion the total figure might suggest.

This is not an argument against real estate or retirement accounts. It is an argument for knowing the composition of your net worth, not just the total. A well-built balance sheet has multiple layers: liquid emergency reserves, tax-advantaged retirement savings, and longer-term assets like real estate or a taxable brokerage account. Each layer serves a different purpose at a different time horizon.⁴

Try it with your numbers

The calculation itself takes less than ten minutes with a complete list of your accounts. Pull your most recent statements for every asset and every liability, subtract the second column from the first, and you have your baseline. Run your numbers at /tools/net-worth, where you can enter each account line by line and see your total update in real time. Do this once now, and again in twelve months. The change between those two snapshots is your strategy's actual report card.

How to move it in the right direction

There is no single lever. Net worth grows when assets increase, when liabilities decrease, or both at once. In practice, the highest-impact moves are:

Eliminate high-cost debt first. A credit card charging 22 percent interest is destroying net worth faster than almost any investment can rebuild it. The Consumer Financial Protection Bureau tracks consumer credit conditions across the country and consistently flags high revolving debt as one of the primary barriers to household wealth-building.⁵

Invest early and consistently. The median net worth for families 35 to 44 is $135,300, more than triple the under-35 figure.¹ That jump is not purely from income growth. It reflects years of compounding inside retirement and investment accounts. Time inside the market is the variable most people underestimate.

Build home equity deliberately. Real estate is the largest asset on most American households' balance sheets.¹ A 15-year mortgage over a 30-year mortgage, or making one extra principal payment per year, accelerates equity accumulation at a rate that can shift your net worth meaningfully over a decade.

Track it annually, not obsessively. Net worth is a long-game metric. Checking it monthly during a market downturn invites panic over signal. An annual review, tied to the same month each year, gives you a clean comparison and enough distance to see real trends rather than noise.

Overall, the number that matters most in personal finance is not the one on your paycheck. It is the one you would be left with if the paycheck stopped tomorrow. Start measuring it, and you will start making decisions that move it.

What would your number look like if you had started tracking it five years ago?