What Is Your Net Worth?

Let’s cut to the chase from the get go.

Everything you own of significant value is known as your assets, and all of your debts are called liabilities.

Your net worth is essentially the total figure after you add all of your assets and subtract all of your debts.

So you now know the basics of what your net worth means. But why does this matter?

Because knowing what your net worth is helps you evaluate your current financial status and see progress over time.

More importantly, I believe keeping track of your net worth can make the difference between being motivated to improve it, or staying unaware and uninspired to change it. Those who monitor their net worth and take control of their money will of course become richer than those on the sidelines.

And there’s nothing sweeter than having a net worth high enough to reach financial freedom.

If you’re a college student or a young professional, the earlier you get a jump on this the better. Time and compound interest (interest that makes interest off of itself essentially) are on your side to grow your wealth when you’re young.

So let’s learn more about net worth, how to track it, and how to improve it over time.

What Does Net Worth Specifically Include

what is your net worth
A sick car, but a terrible asset.

We have the basic understanding of adding our assets and subtracting our debts to get to our net worth. But you may be asking what are some specific assets and what are some specific debts or liabilities.

Here’s a list below with the most common assets and debts.


  • Stocks/retirement accounts
  • Savings account money
  • Checking account money
  • Car
  • Home
  • Art, coins, jewelry, etc. (need to be rare and of value to be a significant asset)


  • Student loans
  • Credit card debt
  • Personal loans
  • Car loans
  • Home loans (mortgage)

This list should make sense for the most part. But there is one potentially confusing area. You’ll find that a car and a home appear as both an asset and a debt.

This is because if you spend $10,000 on a car, you now have both the asset of the vehicle’s worth plus the debt of a monthly bill.

And once you make all the payments to completely pay off the car loan, then it becomes a 100% asset. Although cars depreciate over time until they’re essentially worth a big old $0.

So spending money on a car may be necessary to commute to work, but it’s not in the same league as buying stock when it comes to assets.

How To Track Your Net Worth

The ancient way of tracking your net worth is to get out a pen and a notebook, draw a line down the middle, and write down all your assets on the left and their value, and all your debts on the right and their value.

Then subtract your debts from your assets to find your net worth. Besides this being a pain, you’d unfortunately have to repeat this process each time you wanted to recalculate because your assets and debts will change over time.

Sounds like fun, doesn’t it?

Or you can scratch this monotonous task and use technology to your advantage. The money management site Mint.com automatically calculates your net worth for you so you can spend your time doing better things.

Mint.com is extremely easy to use and user-friendly. All you need to do is initially connect your bank accounts and credit cards, then Mint will calculate your net worth and update it each day.

There’s also a tab on Mint called ‘Trends’ that I check each month to see how my net worth is changing over time. It’s encouraging when you increase your income, save more, or spend less, and find your net worth rising month after month.

How To Improve Your Net Worth


You now know what makes up your net worth and how to track your wealth. There’s one last subject and it’s the most important: building your net worth.

For simplicity, the two routes to build your net worth are to increase your assets and decrease your liabilities. The five steps below are designed to accomplish both of these tasks.

And if you consistently implement these action steps in your life, you’ll watch your net worth soar to five, six, or seven figures and beyond. That means success and financial freedom is around the corner for those who take action.

1. Increase your income

If your schedule allows it as a student, then I’m certainly a fan of young adults working to make money on the side.

Get an off-campus or on-campus job. Tutor other students for money. Or start a blog and monetize it later.

Even if your income is low, it’s helpful to get in the habit of increasing your net worth before you graduate.

If you’ve graduated and are making a full-time income, then look for ways to make more money: work a side hustle on the weekend, negotiate a salary raise, or find a new, higher-paying job.

A high-income isn’t a necessity to increase your net worth, but some type of income is needed to improve your net worth.

2. Save a high percentage of your income

In my new book Freedom Money, I recommend saving 50% of your income if you have a full-time job. This may seem like a lot, because it is, and saving that much money will be difficult if you’re not used to it.

But by saving a high percentage of your income over time, you give yourself the freedom to retire early or work on something you enjoy. For example, some people who save over 50% of their income from age 22 and on are able to retire at 35 or even 30.

This is easier said than done, but it shows the opportunity is there when you commit to saving money. And the freedom to do what you want makes saving this worth it.

If you’re in college and with student loans, then save 50% of your income and use that to pay off your student debt when you graduate. Or if you’re a college student without loans, save 50% of your income and put it in index funds (point #5 below).

3. Spend less on liabilities and buy more assets

A guaranteed way to improve your net worth is to spend less than you make each month. Each dollar that you spend eating out or buying a new outfit is money subtracted from your net worth. That’s common sense and everyone knows this.

But what people don’t know or fail to act on is that each dollar spent on a frivolous liability is money that could have been used to buy an asset—which will increase in value over time.

So spending $15,000 on a new car sounds like a good idea, until you realize that in 20 years the car will be worth $0.

And you could have put this same $15,000 in an asset—like an index fund—that would turn into $60,000 in 20 years. If you’re decent at math, that’s four times the initial sum.

4. Attack your debt

If you have a negative net worth where your debts outweigh your assets, which is common as a young adult, then attacking your debt is essential. Even if you have a high net worth, paying down debt will help you sleep easier at night with less anxiety.

To do this, use the extra money from saving more and spending less to aggressively pay off your debt. Some powerful approaches to get your debt to zero include:

  • Paying biweekly instead of monthly
  • Making larger payments than required
  • Setting up automatic payments

If you’re looking for loan forgiveness, check out this article on how to fund graduate school. And if you don’t have any debt, your priority is to stay out of debt and work on building your assets to financial freedom.

5. Invest in index funds


You might lose money if you buy individual stocks, expensive mutual funds, or overpay a financial adviser. But history says you’re bound to make money if you invest in a low-cost index fund that mimics the S&P 500.

Over time, index funds have returned around 10% profit. That makes your local bank’s 0.05% saving account interest look like a crime.

To drive my point home about index funds, here’s what Warren Buffett said about it, “By periodically investing in an index fund, the know-nothing investor can actually out-perform most investment professionals.”

If you continue to buy and keep your money in the index fund, this asset can change your net worth and life in a radical manner.

If you’ve calculated what your net worth is, is it higher or lower than you expected? How will you take action to improve your net worth? Any other questions that I didn’t address?

Related: How Often Should You Check Your Stocks?

Brian Robben

Brian Robben is the founder of Take Your Success, a site dedicated to helping entrepreneurs and wantrepreneurs grow a profitable business and reach freedom. For in-depth training, visit: brianrobben.com

This Post Has 4 Comments

  1. Grant M

    Brian, what books have you read on investing and have you personally began investing in index funds?

    1. Brian Robben

      That’s funny you ask, because for about 6 months I only read investing books. I’m actually going to write a post about all the investing books I read and what I learned. But for now, off the top of my head, I remember reading these titles: Snowball, Flashboys, More Money Than God, You Can Be A Stock Market Genius, The Intelligent Investor, The Smartest Investment Book You’ll Ever Read, The Making Of An American Capitalist, and a few others.

      And to answer your other question, currently I’m invested in these index funds: VTSAX (total stock market), VFINX (S&P 500), and VFWIX (all world excluding U.S.). I believe my book Freedom Money does a great job explaining how much of your money to invest in index funds and what to do with your other money for investments. If you’re interested, here’s the link: https://www.amazon.com/Freedom-Money-Simple-Automatic-Adults-ebook/dp/B01CLWUSOM

      Great questions, Grant. To answer the potential underlying question, I do put my money where my mouth is literally haha.

  2. Mitko Karshovski

    The $-42,000 net worth was a rude way to start the morning…darn student loans. Great article!

    1. Brian Robben

      You won’t sweat them after they’re paid off and you’re balling.

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