Net worth is the single most important financial metric to track. Learn how to calculate yours, what is normal by age, and why tracking it monthly changes your financial behavior.
Income is what you earn. Net worth is what you've kept. Two people earning the same income can have wildly different net worths based on their spending, saving, and investing habits.
Net Worth = Total Assets - Total Liabilities
Liquid assets (can be converted to cash quickly):
- Cash in checking/savings accounts
- Money market funds
- Crypto holdings (at current value)
- Stocks and ETFs
Illiquid assets (harder to convert):
- Real estate (market value, not purchase price)
- Retirement accounts (401k, IRA, pension)
- Business equity
- Vehicles (depreciated value)
- Jewelry, art (if significant)
Example:
Assets: Checking $3,000 + Savings $8,000 + Index funds $22,000 + 401k $15,000 + Car $8,000 = $56,000
Liabilities: Student loans $20,000 + Car loan $5,000 + Credit card $1,500 = $26,500
Net Worth = $56,000 - $26,500 = $29,500
Average US net worth by age (Federal Reserve data):
- Under 35: $76,000
- 35-44: $436,000
- 45-54: $833,000
- 55-64: $1,175,000
Median (more representative):
- Under 35: $13,900
- 35-44: $91,300
- 45-54: $168,600
If you're above median for your age, you're ahead of most people.
The trend matters more than the current number. A net worth growing consistently by $1,000-2,000/month from your early 20s puts you on track for financial independence. A stagnant or declining net worth — even with a good salary — signals a spending or debt problem.
FlowFund's Net Worth module automatically aggregates all your accounts and shows your wealth trend over time.
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