Net Worth

One of my favorite things to do with my budget is calculate my husband’s and my quarterly net worth.  It’s fun to map out the progress that we make toward our financial goals. I started tracking our net worth about a year ago and it has helped guide us in our financial goals and decision making. Tracking our net worth has shown us areas in which we can improve our net worth to work toward financial independence and, ultimately, retirement. 

What Is Net Worth? 

Simply put, net worth is what is owned minus what is owed. There are a couple of different schools of thought regarding which assets (what is owned) should be included when calculating net worth. When I calculate the net worth for my husband and myself, I include all cash accounts, all investment accounts, and all tangible assets that are equal to or greater in value than our vehicles. So, for us, the “what is owned” side of the equation includes a checking account, a savings account, two Roth IRAs (one for each of us), a 401k, a TSP, a health savings account, several different investment accounts, our rental house that we own, our new house, and two vehicles. Some people choose not to include vehicles and some people choose not to include tangible assets at all. I like to look at net worth as how much cash I would have if I liquidated (sold) everything I own.  

Now for the “what is owed” side of the equation. To me, this side of the equation is more straightforward than the “what is owned” side. This side of the equation is the total of all liabilities held. For my husband and me, the only liability that we currently have is our mortgage. For others, liabilities might include auto loans, student loans, credit card debt, etc.  Once the total of all liabilities is calculated, all that’s left to do is subtract the liabilities from the assets and, boom! Net worth. 

As I mentioned earlier, there are different schools of thought regarding what assets should be included in calculating get worth. In reality, it doesn’t matter what assets are included as long as there is consistency. For example, if we wanted to exclude the value of our rental house from our list of assets, we would also have to exclude the outstanding balance on that mortgage loan from the liabilities total. There also has to be consistency month to month or quarter to quarter (however often net worth is calculated) in which assets and liabilities are used in the net worth equation. If I am calculating my husband’s and my net worth and decide that I don’t like this quarter’s numbers compared to last quarter’s numbers, I can’t just eliminate a liability or add an asset to make the numbers look better. I have to decide from the beginning which assets and which liabilities I want to include in my husband’s and my net worth calculation and use those assets and liabilities for each quarter. If I decide to remove a liability, then I also have to remove the value of the asset it is associated with. Using my previous example, if I wanted to remove the liability of the mortgage loan on our rental property, I would also have to remove the value of that property from our list of assets. If there is no tangible asset associated with a liability, such as with student loans, then it is my opinion that that liability shouldn’t be removed from the equation.  


I have not taken into consideration anybody’s unique and specific situation. This post is based solely on how I personally do my budget and on my personal opinions regarding budgeting. This is not intended to be used as personal financial advice. If you would like one-on-one personal budgeting advice, please click the Budget Coaching button below or contact me to set up a consultation call. Also, if you haven’t already, sign up for my monthly newsletter! I will be sending out exclusive content each month and you will get a free budget guide as a thank you for signing up!


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Published by Myranda Griebel

It is my goal to reach as many people as possible that need help, guidance, or advice with any aspect of budgeting so that they can work toward living the life they deserve and desire.

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