Why Net Worth Matters
Your salary tells you how much you earn. Your net worth tells you how much you've kept. It's the clearest snapshot of your financial health.
The Formula
Net Worth = Total Assets − Total Liabilities
That's it. Simple in theory, powerful in practice.
Step 1: List Your Assets
Assets are things you own that have monetary value:
| Category | Examples | |----------|----------| | Cash & savings | Current accounts, savings accounts, Cash ISAs | | Investments | Stocks & Shares ISA, SIPP, workplace pension, GIA | | Property | Market value of any property you own | | Business equity | Value of any business you own or co-own | | Other | Crypto, Premium Bonds, collectibles, vehicles |
Step 2: List Your Liabilities
Liabilities are what you owe:
| Category | Examples | |----------|----------| | Mortgage | Outstanding balance (not the property value) | | Credit cards | Total balance owed | | Loans | Personal loans, student loans, car finance | | Other debt | Overdrafts, Buy Now Pay Later, money owed to family |
Step 3: Subtract
Assets minus liabilities. A positive number means positive net worth. A negative number is fine. Most people start there, especially with student loans and mortgages pulling the figure down.
A Worked Example
| Assets | Amount | |--------|--------| | Savings | £8,500 | | Stocks & Shares ISA | £12,000 | | Workplace pension | £35,000 | | Total Assets | £55,500 |
| Liabilities | Amount | |-------------|--------| | Credit card | £2,400 | | Student loan | £18,000 | | Total Liabilities | £20,400 |
Net Worth: £55,500 − £20,400 = £35,100
Track It Over Time
Calculating once is useful. Tracking monthly is where it starts to work. Small increases compound into dramatic changes over years. Use CoreFi to automatically calculate your net worth from connected accounts.
Four Things Most People Get Wrong
Include your pension. For most people under 40, it's the largest single asset they own. Leaving it out understates your net worth and ignores the compounding that's already happening.
Use market values for property. Use recent comparable sales in your area, not what you paid five years ago. Rightmove and Zoopla give a reasonable steer.
Leave out your possessions. Your TV, car (unless it's an appreciating classic), and furniture are depreciating items, not financial assets. Including them flatters the number without meaning much.
Student loans are a special case. They're wiped after 30 years in England and don't hit your credit score the way commercial debt does. Some people exclude them from the calculation on the basis that they may never fully repay. Both approaches are defensible. Just be consistent.