How to Calculate Your Net Worth (and Why It Matters)

Net worth is the single most useful number in personal finance. It is calculated simply:

$$\text{Net worth} = \text{Total assets} - \text{Total liabilities}$$

Tracking your net worth — even once a year — gives you a clear picture of whether your financial position is improving over time, regardless of what is happening in any single account or investment.

What to Include in Assets

List everything you own that has monetary value:

Cash and liquid assets

• Savings accounts and transaction accounts
• Term deposits
• Cash in hand

Investments

• Share portfolio (ASX, ETFs, international)
• Superannuation balance
• Investment property value (use a conservative estimate)
• Managed funds
• Bonds

Property

• Owner-occupied home (current market value)
• Investment property (current market value)

Vehicles and other assets

• Car (current market value — use RedBook)
• Motorbike, boat, caravan
• Business ownership interest

Note on personal property: Most personal finance practitioners exclude personal household items (furniture, electronics, clothes) from net worth calculations as they are difficult to value and rapidly depreciate. Include only items that could realistically be sold for meaningful value.

What to Include in Liabilities

List everything you owe:

• Mortgage balance
• Investment property loan balance
• Personal loans outstanding balance
• Car loan outstanding balance
• Credit card balances (current debt, not limit)
• HECS-HELP balance
• Buy Now Pay Later balances
• Any other outstanding debts

Example Net Worth Calculation

Should You Include Super in Net Worth?

Yes — superannuation is your money, even if you cannot access it until age 60 (preservation age). Including super gives you an accurate picture of your total financial position. If you are far from retirement, you may want to track your net worth in two figures: net worth including super and liquid/accessible net worth (excluding super).

How to Track Your Net Worth

1. Create a simple spreadsheet with two columns: assets and liabilities
2. Update it quarterly or annually — for most people, annual is sufficient
3. Use a consistent valuation method — the same approach each time (e.g., always use RedBook for car value, always use your most recent property estimate)
4. Chart it over time — the trend matters more than the absolute number

Apps: WeMoney (free) tracks net worth automatically by connecting to Australian bank accounts. Also includes property and super manual entry fields.

Why Net Worth Is More Useful Than Income

Income tells you how much you earn. Net worth tells you how much you have kept. Two people earning $120,000 per year can have vastly different net worth positions depending on their spending, saving, and investment habits.

Growing net worth while your income stays the same means you are becoming wealthier. Declining net worth while your income grows means your lifestyle costs are outpacing your savings.

FAQ

What if my net worth is negative? A negative net worth is common for young Australians, particularly those with a HECS debt and no significant assets yet. It does not indicate failure — it reflects the starting point. Many Australians in their 20s have a negative net worth that becomes strongly positive by their 30s and 40s as mortgages are paid down, super grows, and investments accumulate.

How does net worth compare by age in Australia? See the Average Net Worth by Age guide for ABS data on Australian median net worth by age cohort.

Does my home count as net worth? Yes — your home equity (home value minus mortgage balance) is a component of net worth. However, home equity is illiquid — you cannot spend it without selling the property or borrowing against it.

See also: Average Net Worth by Age in Australia | How to Budget | Investing in Australia