How to calculate net worth — step by step

What is net worth?

Net worth is the simplest measure of your financial situation:

Net Worth = Assets – Liabilities

In other words: what you have minus what you owe. It's one number that shows where you stand financially.

Why is it worth knowing?

• Reference point — you know where you're starting from
• Progress measure — you observe whether your situation is improving
• Motivation — you see the effects of your financial decisions
• Planning — it's easier to set goals when you know your starting point
• FIRE — net worth is the basis for calculating Financial Freedom Runway

Step 1: Count assets

Assets are everything you own that has monetary value:

Liquid assets (easy to convert to cash)

• Cash and bank accounts (checking, savings)
• Bank term deposits
• Investment funds and ETFs
• Stocks and bonds
• Cryptocurrencies
• IKE, IKZE, PPK
• Treasury bonds

Illiquid assets (harder to sell quickly)

• Real estate (market value, not purchase price)
• Car (current market value)
• Valuable items (jewelry, art, collections)
• Business ownership stake

Tip: Value assets realistically — at current market value, not the price you paid.

Step 2: Count liabilities

Liabilities are all your debts:

• Mortgage (remaining amount to pay)
• Car loan
• Consumer loans
• Credit cards (balance to pay)
• Loans from family and friends
• Payday loans
• Student loan

Step 3: Calculate

Example:

Net worth = 110,000 – 20,000 = 90,000 PLN

Negative net worth — is it the end of the world?

No. Many people at the beginning of their careers have negative net worth — especially after taking out a mortgage. This is normal. What matters is the direction: is your net worth growing from month to month?

How to increase net worth?

There are only two ways:

1. Increase assets — save more, invest, build passive income
2. Reduce liabilities — pay off debts, avoid new ones

In practice, it's worth doing both simultaneously — paying off the most expensive debts (with highest interest rates) while regularly investing.

How often to check?

Once a month is the optimal frequency. More often — there's no point (value won't change day to day). Less often — you lose control over the situation.

Create a simple spreadsheet or use an app that automatically updates values.

How Freenance can help

Freenance automatically calculates your net worth in real-time. You connect your bank accounts, broker, crypto — and see one number. No manual counting, no spreadsheets. Freenance also shows a chart of net worth changes over time, so you can see your progress.

👉 Check your net worth automatically — freenance.io