What do you think of when you hear the term, “Net worth?” Do you picture rich folks scarfing caviar and wearing monocles on a yacht off the coast of Greece? (Apparently I do.)

‘Net worth’ does sound like something that only applies to people who have a car that costs more than the average house, but really - knowing your personal net worth is critical when it comes to understanding your actual financial standing.

Your net worth is the intersection of all of your financial decisions - and it points to your overall health when it comes to money.

It’s simple: Your Total assets - Total liabilities or debts = Your Net Worth

The most recent Federal Reserve survey (2022 via MSN) lists Gen X’s median net worth at:

Median worth = The middle point. So if the median is $246,700 net worth - half the people in that group will have more and half will have less than that.

Wherever you land, don’t fret. Keep reading, and we’ll help you figure it all out.

(*Note: It looks like they group their data sets by ten year segments, not down actual generation lines, so the older end of our team gets averaged up with the younger Boomers, and the younger of us get averaged down with Millennials.)

Dana (47) goes on multiple, 4-star vacations every year and always has beautiful, expensive new shoes when you see her. Thanks to an inheritance from her grandmother, she managed to pay off her student debts, buy a trusty Honda Civic and invest $30,000 in an IRA. But she’s also maxed out her credit cards and still chooses to rent an apartment. Dana’s net worth is currently -$10,000.

Michael (51) lives in the same 2-bedroom condo he bought in 2012 when the interest rates were a killer 3.31%. He leases a new Lexus every 3 years, takes time off in the summer and has been slowly renovating his condo, adding equity as he works toward paying off his mortgage. Michael’s net worth is $197,000.

See? Net worth is definitely not just for fancy people who spend more on face cream than you do on a new couch. It also doesn’t mean you have to stay home and never make the fun choice to get ahead.

It’s a simple calculation that acts as a snapshot of your overall financial health in the moment. (Because once you know it, you can change it!)

Income and savings: A positive net worth is affected by both regular savings and higher income. (Although, making more money doesn’t guarantee it’s being used in financially savvy ways.) See: Lifestyle Creep

Investments: Your net worth is impacted by the gains and losses on your investments.

Debt management: Lowering and controlling your debt increases your net worth.

Lifestyle decisions: Major expenses such as financing a home purchase, eating out at expensive restaurants, not saving or budgeting or getting an education might have an impact on your net worth.

Assessing your net worth can help you identify your strengths and shortcomings and take a financial pulse. Here’s a step-by-step on how to get there:

This includes: 

Assign a value to each asset. These should be the up-to-date values. For items like cars or personal property, use a fair market value estimate.

Consider both short-term and long-term debts.

This includes:

Check your loan statements for the outstanding balances on your debts.

Subtract your total liabilities from your total assets.

Net Worth = Total Assets - Total Liabilities

If you have a positive net worth, this means your assets are worth more than your debts and indicates financial stability. If you have a negative net worth, this means your debts are higher than your assets, which indicates financial instability.

According to Credit Karma, 51% of Americans don’t know how to calculate their net worth.

Try this to make it easier. (Clicking the button will take you to Bankrate’s website.)