You’ve probably heard it before: 

“Tracking net worth is the best way to see your financial picture!” 

“Focus on growing your net worth!” 

But what these kinds of quotable clips always fail to mention is… 

What exactly is net worth? 

How can I accurately measure my net worth? 

What are the real reasons net worth matters to my personal finances?

And do I always have to spend hours and hours tracking net worth every month — or is there a better way? 

In this article, we go beyond the quotable blurbs and dive deep into net worth: what it is, how to measure and track it, and why it all matters.

What Does Net Worth Mean and How Can I Calculate It?

Net worth is a single number that shows the value of everything you own, less everything you owe. It’s an accurate snapshot of your financial situation.

In other words, it’s the sum of the value of your assets minus the value of your liabilities. 

What are assets? Assets include pretty much anything you own or anything you’ve invested in that generates income. That could mean cash, bank accounts, brokerage accounts, retirement accounts, IRAs, personal capital, home value, collectibles, investment accounts, real estate, stocks, bonds, and even alternative investments such as domain names, cryptocurrency, and plenty more. 

Liabilities are your debts. Some of your debts are secured by your assets, like your mortgage or car loans. Unsecured debts may include credit card debt, student loans, and lines of credit.

It’s important to note that regular expenditures — like your monthly phone bill, groceries, or one-off purchases at Target — are simply expenses, not liabilities. 

net worth formula

Now, let’s find your net worth. 

The first step to calculating your net worth is adding up the value of your assets. Realize that it can take time to remember all of the assets you’ve invested in over the years, so be patient with yourself in this phase. 

Once you feel you have an accurate accounting of your assets, you can add up your liabilities. It can be similarly challenging to remember every single debt. A tactic that may help is keeping an eye on your automatic withdrawals to track down all the debts you’re paying down every month. 

Finally, it’s time to calculate your net worth!

Surprisingly, this is the easiest part: 

To find your net worth number, subtract the total of your liabilities from the total of your assets. 

Pretty achievable, right? 

Then it’s time to talk about why it matters.

Key Reasons Tracking Net Worth Matters

Knowing your net worth is interesting and all, but why does it actually matter

As we’re about to explore, there are plenty of reasons why understanding and tracking net worth is quite important to your personal finances and financial goals.

Net Worth is an Indicator of Total Financial Health

Your net worth gives you a number that shows your financial health, just like blood pressure shows your physical health.

The median net worth for an American family is $52,700. For individuals, that number looks a little different depending on their age. It’s more like $11,100 until the age of 35, $124,200 between 45 and 54, and $124,200 at age 75 or older. 

And while these numbers can provide a helpful benchmark initially, what’s really important to your personal finances is how your net worth compares to itself over time.

Your income and cash flow fluctuate pretty regularly, and it doesn’t take into account the debts and expenses you’re leveraging against it. 

And then there’s debt — which doesn’t tell the whole story when it’s not compared to the value it produces. Sure, $100,000 in liabilities may sound extreme to most of us — but is it so bad when it helps contribute to $1,000,000 in assets?

That’s what makes net worth so valuable — it’s a single, easily-calculable metric for seeing how your choices balance each other and play out in your financial life over time. This information helps you manage your monthly budget and cash flow and achieve your financial goals.

A Clear View of Net Worth Makes for More Accurate Investments and Goal Setting

There’s no “right answer” when it comes to the net worth numbers you’re supposed to hit before checking off major life goals. 

However, when it comes to purchasing a home, the expert behind Financial Samurai recommends trying to keep real estate to 35% to 50% of your net worth

Armed with this information, you can calculate how much of your net worth you can afford to spend on a home. That way, you can decide whether you can buy a home now or continue putting money in a savings account towards your goal.

When you use a benchmark like this one or if you set one of your own or with the help of a financial advisor, it will help you make informed financial decisions and achieve financial independence. You can decide what you should invest in — and what you should set aside as a future goal if you’re not quite in the right place to complete a purchase or make an investment.

Net Worth Uncovers the Impact of Your Less Tangible Investments 

Net worth is beneficial for making intangible investments more visible.

It can be tough to understand the impact of your investments if you’re like most of us and you don’t have the time or desire to interact with them every day. This is even more true if you’ve engaged in extensive portfolio diversification — which is key to healthy wealth! 

If you look at your net worth, you can see at a glance how your investments are performing. You can look at the big picture or focus on individual investments to see how much they contribute to your wealth. That way, you can tell when you’ve made wise investments and when it’s time for you to explore rebalancing your portfolio to spur new growth.

The Best Way to Improve Your Financial Health is to Track Net Worth

Most of us have heard the famous quote attributed to management consultant Peter Drucker: “If you can’t measure it, you can’t improve it.” 

What can we infer from this advice? If you can measure it, then you can find a way to improve it.

And there are few places where this is more true than in your personal financial space.

Over time, tracking your net worth shows how your decisions impact your financial growth. This enables you to make adjustments to keep things moving upward. 

Why should you want to grow your net worth? Primarily because wealth is the fuel for your financial goals.

Want to achieve those financial goals? Then keep reading to learn what tracking net worth is all about.  

A Step-by-Step Guide to Tracking Net Worth

This section will provide a step-by-step guide to tracking net worth using several different methods — from traditional balance sheets to modern automated net worth tracking and financial planning tools.

1. Create a List of Your Assets and Liabilities

As we described above, calculating net worth is all about having an accounting of your assets, your liabilities, and the difference between them.

Gathering all this financial information may take a while the first time you do it. It can help to compile all your information in a single place. This keeps things organized and makes finding things later a lot less stressful.

And that point brings us to our next step — choosing a tracking method that makes this entire  process a little faster and more comfortable. 

2. Choose Your Net Worth Tracking Method 

There are a few options you can choose when tracking net worth. 

First is the traditional Excel spreadsheet.

Spreadsheets are tried and true, and most people are comfortable with them. Unfortunately, spreadsheets aren’t ideal because they rely on manual data entry. You need to enter your asset and liability information by hand. You also need to update them whenever you add new financial information or when your old information changes. This takes a lot of time and, like anything manual, it’s prone to errors.

However, spreadsheets may be a good choice for people who want a high level of customization and control when they track their net worth. Spreadsheets can also provide a hard copy for people who want an offline version of their net worth tracking.

A similar solution is a spreadsheet template designed to track net worth. Net worth templates usually provide custom fields to make data entry easier, and they have automated processes to detect errors and provide net worth and financial calculations (here’s an example of an Excel net worth template from Microsoft). 

Budgeting apps such as Mint and You Need a Budget can also calculate your net worth but may be limited in their ability to automatically track complex assets and liabilities such as cryptocurrency.

Finally, a modern, software-based solution makes calculating and tracking net worth practically automatic: Kubera.

Kubera is the only all-in-one digital personal balance sheet and wealth tracker that automatically syncs your whole financial portfolio to a single dashboard.

With Kubera, you can easily see the big picture — all your assets and liabilities – and manage your investments and net worth. 

3. Add Your Assets and Liabilities to Your Net Worth Tracker

Here’s the biggest argument for using a software-based tool for tracking net worth: automation. 

With a spreadsheet, you’re stuck doing this step every time you want to see your latest net worth number. The more you want to understand your net worth, the more time you will spend manually entering assets and liabilities with a spreadsheet-based solution. 

However, with Kubera, if you own it — we make it easy to track and manage it.

You can connect all your credit cards, bank accounts, financial accounts, and even crypto accounts to your singular Kubera dashboard in just a few clicks (check out all the institutions we support here). Kubera automatically makes sure all your associated assets and debts are accounted for and included in your net worth calculation.

Kubera’s automated platform keeps the value of your bank and investment accounts up to date, even if they are in foreign, Fiat, or digital currency. That means you can always see your net worth in real-time. 

For more automation, Kubera users can add our individual crypto and stock market tickers to keep an eye on the market and make intelligent financial decisions.

For assets without accounts? 

Not to worry. We’ve integrated with leading asset experts, such as Zillow, to track the true value of assets such as homes, real estate, vehicles, or web domains. 

We’re always adding new asset tracking integrations. For hard-to-assess assets, like your rare collectibles, you can simply enter the details and values in our customizable fields.

add all your assets

4. Continuously Track Your Net Worth Over Time 

Continuously tracking net worth is necessary to understand where you are on the path to your goals — and whether it’s time to recalibrate any of your investments. 

It can be hard to stay motivated to regularly track your net worth when you need to spend an hour manually updating assets and liabilities in a spreadsheet. 

Kubera doesn’t just offer automation that makes continuous tracking easy, it offers charts that make it beautiful. For visual learners, we built Kubera’s custom charts feature to be clear and easy to use. You can keep an eye on asset allocation, watch investment performance, and most importantly, see how your net worth ramps up over time. 

In addition, our recap feature pulls together data from across your entire profile to provide a detailed view of portfolio and assets performance from several time frames.

Continuously Track Your Net Worth Over Time 

Begin Tracking Net Worth in Minutes with Kubera 

Just like we do with everything else, at Kubera, we make it simple to track and grow your net worth. 

It’s even simple to get started! Just sign up for a monthly subscription now and you’ll be tracking your net worth in minutes

Or, if you want to use Kubera with the help of your financial advisor or wealth manager, share our white-label solution and have them reach out to our team at to set up a demo and a custom package. 

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