How to calculate net worth — guide with examples and formulas

What is net worth?

Net worth is the difference between all assets and liabilities. It's the most important indicator of financial situation — it shows the real value of your wealth after deducting debts.

Basic formula:

Net Worth = Assets - Liabilities

How to calculate personal net worth?

Step 1: Calculate assets (what you own)

Liquid assets:

• Cash in wallet and bank accounts
• Term deposits and bonds
• Stocks, ETFs, investment funds
• Cryptocurrencies

Physical assets:

• Apartment/house (market value)
• Car (market value)
• Electronics, jewelry
• Other valuable items

Step 2: Calculate liabilities (what you owe)

Long-term debts:

• Mortgage (remaining amount)
• Car loan
• Student loan

Short-term debts:

• Credit card debt
• Cash loan
• Loans from family/friends

Step 3: Calculate net worth

Example for Kowalski:

Net worth = 1,080,000 - 663,000 = 417,000 PLN

Company net worth

Formula for companies:

Net Worth = Balance Sheet Assets - Balance Sheet Liabilities

Company assets:

• Fixed assets (buildings, machines)
• Inventory
• Customer receivables
• Cash in register and accounts

Company liabilities:

• Loans and credits
• Supplier obligations
• Tax obligations
• Reserves

Investment net worth

For stock portfolio:

Net Worth = Current portfolio value - Amount invested - Transaction costs

Example:

• You invested: 50,000 PLN
• Current value: 62,000 PLN
• Commission costs: 800 PLN
• Net worth = 62,000 - 50,000 - 800 = 11,200 PLN profit

How to increase net worth?

1. Increase assets

Long-term investments:

• ETFs — global stock portfolio (e.g., VWCE)
• Dividend stocks — regular passive income
• Real estate — inflation protection

Career development:

• Additional training and certifications
• Changing to a better-paid job
• Additional income sources

2. Reduce liabilities

Debt repayment strategy:

1. First pay off debts with highest interest rates
2. Refinance loans on better terms
3. Avoid new consumer debt

3. Optimize expenses

Control largest categories:

• Housing (max 30% of income)
• Transportation (max 15% of income)
• Food (max 12% of income)

Use budget management apps like Freenance, which help you track expenses and savings in real-time.

How often to check net worth?

Recommended frequency:

• Monthly — basic control
• Quarterly — detailed analysis
• Yearly — strategic goal review

Metrics to track:

• Net worth growth rate (goal: min. 10% annually)
• Liability share in assets (goal: below 30%)
• Financial liquidity (goal: 6 months of expenses in cash)

Net worth benchmarks by age

Example: If you earn 100,000 PLN annually and are 35 years old, you should have a net worth of around 200,000 PLN.

Mistakes in calculating net worth

1. Asset overvaluation

• Using purchase prices instead of market prices
• Unrealistic apartment valuation
• Ignoring car depreciation

2. Liability underestimation

• Forgetting about small debts
• Ignoring tax obligations
• Not accounting for loan interest

3. Incorrect frequency

• Checking too rarely (lack of control)
• Checking too often (stress from fluctuations)

Summary

Net worth is the most important indicator of your financial situation. Regular calculation and monitoring helps:

• Track progress in wealth building
• Make better financial decisions
• Plan retirement and other long-term goals
• Motivate yourself to save and invest

Remember — net worth isn't a race, but a marathon. Steady growth is important, not temporary jumps.