Net worth is everything you own minus everything you owe. Tracked once a month, it is the clearest sign of whether your money habits are working, more than any single budget category.
The formula
Net worth = assets − liabilities.
Example
Assets: - Checking and savings: $18,000 - Retirement accounts: $42,000 - Car (realistic resale value): $6,500
Liabilities: - Car loan: $14,500 - Credit card balance: $3,200
Net worth = $66,500 − $17,700 = $48,800.
If you own a home, list its estimated value as an asset and the mortgage as a liability. A $245,000 home with $212,000 owed adds $33,000.
Rules that keep it honest
- Same day each month (the 1st works well).
- Use realistic values for cars and homes, not what you paid. Many people leave out furniture and personal items entirely.
- Count the balance owed, not the monthly payment.
- Look at the trend over 6-12 months, not one month. Markets move; the direction is what matters.
What the trend tells you
- Rising steadily: savings and debt payoff are working.
- Flat while income rises: lifestyle creep is eating the raises.
- Falling: check for new debt first.
A spreadsheet with one row per month and one column per account is enough. Add a chart and you will see the trend at a glance.
Free tools
- Net worth calculator: https://smartbudgetsheets.surge.sh/calculators/net-worth-calculator/?utm_source=mataroa
- Savings rate calculator: https://smartbudgetsheets.surge.sh/calculators/savings-rate-calculator/?utm_source=mataroa
- Home equity calculator: https://smartbudgetsheets.surge.sh/calculators/home-equity-calculator/?utm_source=mataroa
- Debt Payoff Planner, up to 8 debts (Payhip): https://payhip.com/b/PtBLU?utm_source=mataroa
- 42 free budget templates, pay what you want ($0 is fine): https://smartbudgetsheet.gumroad.com/l/ngpkrb?utm_source=mataroa
General information, not financial advice. Figures are rounded examples.