Net worth is simple: everything you own minus everything you owe. It is the definitive measure of financial progress — more honest than income because income does not tell you whether you are accumulating wealth or spending everything you earn. Tracking net worth monthly is one of the most powerful habits in personal finance.

The Formula

Net Worth = Total Assets − Total Liabilities

Assets include: cash and bank balances, investment accounts (brokerage, 401k, IRA, Roth), real estate (current market value), vehicles (current value, not purchase price), business equity, and other valuable property. Liabilities include: mortgage balance, auto loans, student loans, credit card balances, personal loans, and any other debts.

Average vs. Median Net Worth by Age (US, 2023)

The average is pulled up significantly by the ultra-wealthy — the median is more representative:

• Under 35: Median $39,040 | Average $183,500
• 35–44: Median $135,300 | Average $549,600
• 45–54: Median $247,200 | Average $975,800
• 55–64: Median $364,500 | Average $1,566,900
• 65–74: Median $409,900 | Average $1,794,600

The “Rule of Thumb” Target

Thomas Stanley’s formula from The Millionaire Next Door: Expected Net Worth = (Age × Annual Pre-Tax Income) / 10. By this measure, a 40-year-old earning $80,000 should have a net worth of ($40 × $80,000) / 10 = $320,000. This is a rough benchmark, not a law.

The Fastest Ways to Build Net Worth

1. Maximize the income-to-expense gap — the amount you save and invest each month is the primary driver
2. Invest consistently — money sitting in a savings account barely grows against inflation
3. Pay down high-interest debt — paying off 22% credit card debt is a guaranteed 22% return
4. Avoid depreciating assets — cars lose value; investments gain value; the mix matters enormously
5. Protect what you have — insurance, emergency funds, and diversification prevent wealth-destroying setbacks