Net worth — definition and how to calculate it
Net worth is a key indicator of your financial health. Learn what net worth is, how to calculate it, and why it's more important than salary.
What is net worth?
Net worth is the difference between the sum of all your assets and the sum of all your liabilities:
Net worth = Assets − Liabilities
This is the simplest and most important indicator of your real wealth.
How to calculate?
Assets (what you own)
- Cash in bank accounts
- Investments (ETFs, stocks, bonds)
- IKE, IKZE, PPK
- Real estate (market value)
- Car (market value)
- Cryptocurrencies
- Other valuable items
Liabilities (what you owe)
- Mortgage (remaining amount)
- Personal loans
- Credit cards (balance)
- Private loans
- Leasing
Example
| Assets | Amount |
|---|---|
| Savings account | 25,000 PLN |
| IKE + ETFs | 80,000 PLN |
| Apartment | 450,000 PLN |
| Car | 35,000 PLN |
| Total assets | 590,000 PLN |
| Liabilities | Amount |
|---|---|
| Mortgage | 320,000 PLN |
| Credit card | 2,000 PLN |
| Total liabilities | 322,000 PLN |
Net worth = 590,000 − 322,000 = 268,000 PLN
Why is net worth more important than salary?
Salary tells you how much you earn. Net worth tells you how much you've built. A person with 8,000 PLN salary and 500,000 PLN net worth is financially stronger than a person with 20,000 PLN salary and −50,000 PLN net worth (net debt).
How to increase net worth?
- Increase assets — save and invest regularly
- Decrease liabilities — pay off debts, avoid new ones
- Avoid lifestyle inflation — don't spend everything you earn
- Invest long-term — compound interest does the work
How Freenance can help
Freenance automatically calculates your net worth, combining all accounts, investments, and liabilities in one view. You see the trend over time and know if your wealth is growing.
Want full control over your finances?
Try Freenance for free