Finance Planning

Net worth calculator

Assets, one per line
Debts, one per line
Annual income
Age
Net worth 198,500
Assets 350000 42000 18000 9000 − debts 210000 8000 2500
Total assets 419,000
Total debts 220,500
Debt to assets 0.526
Debt to income 400.9 %
Stanley & Danko benchmark 209,000
Current values · not what you paid

The last row is the rule from The Millionaire Next Door: age times pre-tax income divided by ten. It is a rough and much-criticised heuristic — it punishes the young severely, ignores whether income arrived recently, and takes no account of housing costs or where you live. It is included as a reference point people ask about, not as a target worth chasing.

A snapshot from figures you supply. It is not advice, and it says nothing about liquidity — a large net worth locked in property does not pay a bill.

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Net worth is everything you own minus everything you owe. Assets of 419,000 against debts of 220,500 gives a net worth of 198,500 — a debt-to-asset ratio of 0.53, and 401% of a 55,000 annual income.

How to calculate net worth

1 List every asset on its own line: property, pensions, savings, vehicles.
2 List every debt: mortgage, loans, credit cards, overdrafts.
3 Use current market values, not what you paid.
4 Recalculate a couple of times a year — the trend is what matters.

Two adjustments make the number more honest. Property should be valued at what it would realistically sell for less selling costs, not at the optimistic end of an online estimate. Pensions should be included even though they are inaccessible, because they are genuinely yours — but noting how much of your net worth is locked away is worth doing separately. A household with 90% of its net worth in property and pension has a large number and very little flexibility, and that distinction matters more than the total.

Questions

Add up everything you own at current value, subtract everything you owe. The result can be negative and often is early in a career.

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