Net Worth Calculation

Personal Finance

Net worth = Total assets minus total liabilities. It is the single most important financial health metric. Tracking net worth annually shows whether you are actually building wealth or just earning and spending. Positive and growing net worth = financial progress.

In detail

Assets to include:nLiquid: savings accounts, FDs, cash, liquid fundnInvestments: mutual funds, stocks, EPF, PPF, NPS, gold, bondsnReal estate: current market value of owned propertynBusiness: equity value (if owned)nPersonal: car (depreciated value), jewellery, other valuablesnnLiabilities to subtract:nHome loan outstanding, car loan, personal loan, credit card outstanding, education loan, any other borrowingsnnPro tips: calculate at the same time each year (e.g., March 31). Exclude primary residence for a more conservative "liquid net worth" calculation.

Formula

Net worth = Total assets - Total liabilitiesnLiquid net worth = Financial assets + Investment assets - All liabilitiesn(Excludes illiquid assets like property for a conservative measure)

Real-life example

🇮🇳 India example

Priya's balance sheet: flat market value Rs 90L + mutual funds Rs 18L + EPF Rs 12L + gold Rs 4L + FD Rs 3L + car Rs 3L = assets Rs 1.3 Cr. Liabilities: home loan Rs 42L + car loan Rs 1.5L = Rs 43.5L. Net worth: Rs 86.5L. Liquid net worth (excluding flat): Rs 37L - Rs 1.5L = Rs 35.5L.

Frequently asked questions

How do I track net worth over time? ▼

Simple: create an annual spreadsheet with same categories each year. Update values every March 31. Track year-over-year change. A growing net worth (even if slowly) confirms the investment strategy is working. Apps like INDwealth, Kuvera, Wealthy provide automated net worth tracking.