Run the calculation
On the asset side, list the balances of checking, savings, investment and retirement accounts, your home at a conservative estimate of what it would sell for, vehicles at their private-party resale value, and any vested company stock. Leave out furniture, clothes and electronics, which fetch very little when sold. On the liability side, list the mortgage balance, student loans, car loans, every credit card balance as of that day, medical debt, taxes owed, and money owed to family.
Take a twenty-nine-year-old with $6,000 in cash, $31,000 in retirement accounts and a car worth $9,000, for $46,000 in assets. Against that stand $24,000 in student loans, $5,000 on the car and a $1,000 card balance, for $30,000 in debts. The net worth is $16,000.
What normal looks like
A negative figure in your twenties is ordinary, particularly with student loans, and it says little about where you will finish. The Federal Reserve's 2022 household survey put the median net worth of households headed by someone under thirty-five at about $39,000, and at about $135,000 for ages thirty-five to forty-four. The averages are several times higher because a small number of very wealthy households pull them up, so compare yourself with medians. The direction of your own line matters more than its level.
A twenty-minute routine
Choose two fixed dates, such as the first weekends of January and July. Keep a spreadsheet with one row per account and one column per date, and enter the balances. Beside each total, note how much of the change came from your own deposits and debt payments and how much from market movement. In a falling market your net worth can drop during a year in which you did everything right, and the figure to watch then is what you added.
Common distortions
- A car entered at its purchase price overstates what you own, since most cars lose about half their value in five years.
- A home entered at an optimistic online estimate ignores the six percent or more that selling it would cost.
- A traditional retirement balance includes taxes not yet paid, so it is worth less than the same balance in a Roth account.
- Unvested stock and unvested employer contributions are not yours yet and do not belong on the list.
- Checking monthly measures the stock market's mood and not your progress.
Tip Keep a second line for liquid net worth, which leaves out home equity and retirement accounts. It shows what you could actually reach in a bad year.
