How to Calculate and Improve Your Net Worth

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8 min
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As the team's Capital Markets Analyst, Jacob conducts market and investment research and assists in the development of business strategy to serve our clients more effectively.
July 21, 2023

Net worth is a measure of your financial health. It is calculated by subtracting your liabilities from your assets. Assets are things you own that have value, such as your home, car, and savings accounts. Liabilities are debts you owe, such as credit card debt, student loans, and mortgages.

A positive net worth means that you own more than you owe. A negative net worth means that you owe more than you own. A positive net worth is generally considered to be a sign of financial health, while a negative net worth can be a sign of financial trouble.


Your net worth is a reflection of your financial choices. It shows how much money you have accumulated over time, and it can be a helpful tool for tracking your financial progress. A high net worth can give you peace of mind and financial security, while a low net worth can make it difficult to achieve your financial goals.

There are many reasons why it's important to calculate and improve your net worth. Here are a few of the most important reasons:

  • To track your financial progress: Net worth is a great way to track your financial progress over time. By tracking your net worth regularly, you can see how your financial situation is changing and make adjustments as needed.
  • To set financial goals: Net worth can help you set financial goals. For example, if you have a negative net worth, you may want to set a goal of increasing your net worth by a certain amount over a certain period of time.
  • To get a loan: If you need to get a loan, your net worth can be used to determine your eligibility for the loan and the interest rate you will be charged.
  • To qualify for financial aid: If you are applying for financial aid, your net worth will be considered as part of the application process.

How to Calculate Your Net Worth

To calculate your net worth, you need to add up the value of all your assets and subtract the total amount of your liabilities. Here is a list of common assets and liabilities:


  • Cash
  • Home
  • Car
  • Retirement accounts
  • Investments
  • Other assets


  • Credit card debt
  • Student loans
  • Mortgage
  • Car loans
  • Other liabilities

Once you have a list of your assets and liabilities, you can calculate your net worth by following these steps:

  1. Add up the value of all your assets.
  2. Subtract the total amount of all your liabilities.
  3. The result is your net worth.

How to Interpret Your Net Worth

Your net worth can tell you a lot about your financial situation. A positive net worth is a good sign, but it's important to consider the quality of your assets as well. For example, a home is a valuable asset, but it can lose value over time. On the other hand, investments can appreciate in value over time, which can help you grow your net worth.

Your net worth can also change over time. As you earn more money, save more money, and pay off debt, your net worth will increase. However, if you spend more money than you earn, your net worth will decrease.

How to Improve Your Net Worth

There are many things you can do to improve your net worth. Here are a few tips:

  • Increase your income. This can be done by getting a raise, starting a side hustle, or investing in yourself through education or training.
  • Reduce your expenses. This can be done by cutting back on unnecessary spending, such as eating out or shopping for new clothes. You can also save money by negotiating your bills, such as your cable bill or car insurance.
  • Invest your money. This can help you grow your wealth over time. There are many different ways to invest your money, so it's important to do your research and choose an investment strategy that is right for you.
  • Pay off debt. Debt can be a major drag on your net worth. If you have debt, make a plan to pay it off as quickly as possible.
  • Create a budget. A budget can help you track your income and expenses so that you can make sure you are spending less than you earn.
  • Save for retirement. The earlier you start saving for retirement, the better off you will be. Even if you can only save a small amount each month, it will add up over time.

By following these tips, you can improve your net worth and build a strong financial foundation for your future.


Tracking your net worth is a great way to stay on top of your finances and make sure you are on track to reach your financial goals. There are many different ways to track your net worth, so find a method that works for you and stick with it. By tracking your net worth regularly, you can make informed financial decisions and improve your financial situation over time.

About us
Fjell Capital is a leading wealth management firm designed to deliver results for people who desire to be excellent with their finances. Starting at $125/month and a 0.75% asset management fee you can work with Fjell Capital. No asset minimums. Learn more about Fjell Capital here.
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