How to Calculate Your Net Worth

Knowing your “net worth” isn’t just for millionaires or the rich list – it’s a useful snapshot for everyday Australians, especially as you start thinking about retirement. In a nutshell, net worth is the total value of everything you own minus everything you owe. It’s a single number that measures your overall financial health and can help guide your money decisions, from setting retirement plans to tackling debts. For example, someone earning a high income isn’t necessarily wealthier than someone on a modest wage; if they have big debts and little savings, their net worth could actually be lower. In other words, net worth gives a more complete picture of your finances than income alone.

What Is Net Worth, and Why Does It Matter?

It’s simply the difference between what you own and what you owe. If you add up all your assets and subtract all your liabilities, the remainder is your net worth. Think of it as your personal balance sheet. A positive net worth means you own more than you owe (yay!), while a negative net worth means your debts outweigh your assets (time to course-correct).

Knowing your net worth matters because it’s a good indicator of your financial fitness. It’s like a report card for your money habits over the years. Tracking it can help you spot problems (for example, too much debt) or confirm you’re on the right track for your goals. This is especially important for those in their 40s and 50s approaching retirement – it tells you if your nest egg is growing enough or if you might need to make some adjustments.

Your net worth effectively reflects the resources you’ll have to fund your retirement – your super, investments, home equity, etc. – minus any lingering debts you’ll want to clear. And don’t worry, net worth isn’t static or a judgment on your personal value. It changes over time as you pay off mortgages, save more in super, see property values rise or fall, and so on.

The key is to calculate it regularly (say, yearly or whenever major financial changes happen) to track your progress. It’s quite satisfying to see it grow as you chip away at debt and build up assets. And if it’s not as high as you’d like yet, that’s okay, now you have a starting point and motivation to improve it.

Adding Up Your Assets (What Do You Own?)

Let’s start with the assets side of the equation. These are all the things you own that have financial value. When counting up your assets, focus on the significant items (no need to count every DVD or your old footy trophies). Here are the common asset categories to include:

• Real estate – Your home (primary residence) and any other property or land you own. Use the current market value (what you could reasonably sell it for today).

• Superannuation – The balance in your super account(s) is absolutely part of your net worth, even though you generally can’t access it until retirement.

• Savings and cash – Money in your bank accounts, term deposits, offset accounts, and any cash stash.

• Investments (Shares and Funds) – The market value of your shares, exchange-traded funds (ETFs), managed funds, or other investment portfolios.

• Other investments – This could include business ownership, investment properties not already counted, cryptocurrencies, or other valuable assets.

• Personal assets of value – Cars, caravans, boats, jewellery, or anything of significant resale value.

Add up all these items to get your Total Assets. Use current values wherever possible. It’s a bit of legwork, but worth it for accuracy.

Listing Your Liabilities (What You Owe)

Next up: liabilities, aka your debts and financial obligations. These are the things you owe to banks or other lenders. Common liabilities include:

• Mortgages – The remaining balance on your home loan, and any loans on investment properties.

• Personal loans – Including car loans or other unsecured loans.

• Credit card debt – The current outstanding balance on your credit cards.

• HECS/HELP or other student debt – Include your current student loan balance.

• Other liabilities – Tax debts, business loans, or anything else you owe.

Add up all of these to get your Total Liabilities. Be honest and thorough. Note that you don’t need to include regular household bills – we’re only counting actual debts, not upcoming expenses.

How to Calculate Your Net Worth

Now the fun part – crunching the number. It’s a simple formula:

Net Worth = Total Assets – Total Liabilities

That’s it. If your assets total $800,000 and your liabilities are $300,000, your net worth is $500,000.

Pro tip: Gather your latest bank, super, and loan statements so your figures are up to date. If you’re not sure what your house is worth, look up recent local sales online.

If your result is positive – congratulations, you’ve built a solid financial base. If it’s negative, that’s okay too, now you know where to focus your efforts. Every dollar of debt paid off or savings added will improve your position.

Tools to Help You Track

There are a few easy ways to calculate and track your net worth in Australia:

• MoneySmart’s Net Worth Calculator – The government’s free tool is simple and a great place to start.

• Spreadsheets – A Google Sheet or Excel doc can do the job. Create a table with your assets and liabilities and update it regularly.

• Finance Apps – Aussie-friendly options like WeMoney, Frollo, and Humaniti let you link your accounts and track your net worth in real time.

• Bank or super fund dashboards – Some banks and super funds now provide tools to show your total financial position, especially if you have multiple products with them.

Whichever method you use, aim to check in at least once a year. Some people like to review it quarterly to stay motivated.

Final Thoughts

Calculating your net worth is one of the best ways to get a clear picture of your finances. For Australians aged 35 to 60, it’s especially important as you start planning for retirement. It tells you if your finances are heading in the right direction – and if not, gives you a chance to steer things back on course.

And remember, this isn’t a comparison game. It just needs to support the life you want. So take 20 minutes, grab a cuppa, crunch those numbers, and get to know your net worth. You might be pleasantly surprised.

Any advice is general in nature only and has been prepared without considering your needs, objectives or financial situation. Before acting on it, you should consider its appropriateness for you, having regard to those factors. Before making any decision about whether to acquire a financial product, you should obtain the Product Disclosure Statement.