Net Worth
Net worth is what you own after everything you owe is subtracted. It is the one headline figure that cannot be improved by moving money between accounts: paying a card off from savings lowers both sides and leaves the total where it was.
A balance sheet puts what you own on one side and what you owe on the other. The difference between them is net worth.
Total Assets − Total Debts = Net Worth
Income shows earning power and savings rate shows behaviour. Net worth captures the cumulative result of both, which is why it moves slowly and reads differently from either one.
Why it matters
- It is what funds retirement, rather than salary
- It measures accumulation over time, not over one month
- It separates high earners from high savers
- It is the figure financial independence is defined against
Assets (what you own)
- Bank accounts: checking, savings, CDs
- Investment accounts: brokerage, 401(k), IRA, HSA
- Real estate equity, meaning the home's value less the mortgage
- Other holdings: vehicles, business equity, crypto
Debts (what you owe)
- Mortgage balance remaining
- Student loans
- Auto loans
- Credit card balances carried month to month
- Personal loans, medical debt, and similar
Home equity is the awkward one. It is the largest asset for most American households and also the least liquid, since it cannot be spent without selling or borrowing against it. Promi counts it, and also shows investable net worth, which is the total less home equity, in the views where that distinction changes the answer.
How quickly each of these can become cash is a different question from what it is worth. The Emergency Fund guide covers liquid and illiquid assets, and why only the first produces runway.
Promi sorts assets into these categories:
- Checking
- Everyday spending accounts. Little or no interest, immediately available.
- Savings
- Reserves and goals. High-yield accounts pay several times the standard savings rate.
- Investment
- Brokerage accounts holding stocks, bonds, ETFs and mutual funds.
- Retirement
- 401(k), IRA, Roth IRA. Tax-advantaged, with penalties for early withdrawal.
- Real Estate
- Property values. Typically the largest single asset a household holds.
- Other
- HSA, CDs, money market, 529 plans, cash management.
What separates one debt from another is its rate and what it bought:
- Credit Cards
- Revolving debt at the highest rates most households carry. A balance cleared each cycle accrues no interest.
- Loans
- Mortgages, auto, student and personal loans. Fixed schedules, and generally lower rates than revolving credit.
The total is blind to two things that matter: what the debt bought, and what it costs. A fixed mortgage at 3% and a revolving balance at 24% appear identically on a balance sheet, so it is worth reading next to the rates.
National median net worth by age bracket, before any cost-of-living adjustment:
| Age | Median NW | Mean NW |
|---|---|---|
| Under 35 | $39K | $183K |
| 35-44 | $135K | $549K |
| 45-54 | $247K | $975K |
| 55-64 | $364K | $1.6M |
| 65-74 | $410K | $1.8M |
| 75+ | $335K | $1.6M |
Federal Reserve Survey of Consumer Finances, 2022, in 2022 dollars. The next survey covers 2025.
Notice the gap between median and mean. A small number of very wealthy households pulls the mean far above the middle of the distribution, so the median is the closer comparison for most people.
A negative figure means debts exceed assets. It is more common than it sounds, and it usually reflects timing rather than habit.
Common scenarios
- Recent graduates. Student debt arrives years before the earnings it bought, so the trajectory carries more information than the level.
- New homeowners. A mortgage lands in full on day one while the equity behind it accrues over decades.
- Medical or unexpected debt. Often unrelated to spending behaviour entirely.
The direction carries more information than the number. Moving from −$50K to −$30K over a year is a $20K change in position even though the total is still negative. The Year-over-Year section plots that slope.
This content is educational and informational only. It is not financial, investment, or tax advice. Consult a qualified professional before making financial decisions.