Hello, and welcome. Let’s talk about a question I used to find really confusing: “Am I financially healthy?”
For years, I thought the answer was my monthly payslip. If my salary went up, I felt “rich.” If I got a big bonus, I felt successful. But I had this nagging feeling that I was missing the big picture. I saw friends earning a ton of money but who always seemed stressed about EMIs and credit card bills. I also knew people with modest incomes who lived peacefully, took vacations, and never seemed worried.
What did they know that I didn’t?
They knew their net worth.
Your salary is what you earn. Your net worth is what you own. It’s the single most important number to understand your financial life. It’s your personal balance sheet, your financial report card, and the true measure of your progress toward wealth.
Calculating it for the first time was an eye-opener for me. It was scary, a little bit exciting, and it completely changed my relationship with money. It shifted my focus from just earning more to owning more.
In this article, I’m going to walk you through exactly how to calculate your net worth, step-by-step. No complex jargon, no scary spreadsheets (unless you want one). Just a simple, human-friendly guide to finding your number.
Let’s get started.
What is Net Worth, Really? (And Why It’s Not Your Salary)
In the simplest terms, your net worth is the answer to this one question:
If you sold every single thing you own of value, and used that money to pay off every single debt you have, how much money would you have left?
That leftover amount is your net worth.
It can be positive (you own more than you owe), negative (you owe more than you own), or zero. All three are perfectly normal, especially at different stages of life.
Why Your Salary is a Misleading Metric
Think of your salary like the speed of a car. It tells you how fast you’re going, but it doesn’t tell you how much fuel is in the tank or how far you are from your destination.
A person earning ₹2 lakhs per month might seem wealthy. But what if they have:
- A ₹1.5 crore home loan
- A ₹10 lakh car loan
- ₹3 lakhs in credit card debt
Their high income is just servicing massive debts.
Now, consider a person earning ₹80,000 per month. But they:
- Have paid off their home.
- Have ₹20 lakhs in mutual fund investments.
- Have no personal loans.
This second person has a much higher net worth and is in a far stronger financial position, despite having a lower “speed.”
Tracking your net worth is the only way to know if your financial “car” is actually moving toward your destination (like financial independence, a comfortable retirement, or just peace of mind).
What is the Formula for the Net Worth?
Okay, let’s get to the core of it. The formula itself is incredibly simple. It’s the foundation of all accounting, and it’s all you need.
Here it is:
Net Worth = Total Assets – Total Liabilities
That’s it.
- Assets: Everything you OWN that has monetary value.
- Liabilities: Everything you OWE to others.
The rest of this guide is simply about finding those two numbers. Let’s break them down, one by one.
Step 1: Calculate Total Assets (Listing Everything You Own)
This is the fun part. You get to make a list of everything you own that’s worth money. To make this easy, let’s break it down into four main categories.
Pro-Tip: Grab a notebook or open a simple spreadsheet. We’re just adding numbers.
1. Liquid Assets (Your “Cash”)
These are assets that are either cash or can be converted to cash very quickly.
- Savings Account Balance: Log in to your bank app. Write down the total balance from all your savings accounts.
- Cash in Hand: The money in your wallet or stashed at home.
- Fixed Deposits (FDs): List the principal amount + any accrued interest.
- Recurring Deposits (RDs): Same as FDs, what’s the total value right now?
2. Investment Assets (Your Money That’s Working for You)
This is where wealth is often built. You need to find the current market value for each of these.
- Mutual Funds: Log in to your mutual fund platform (like Groww, Zerodha Coin, Kuvera) or the CAMS/Karvy portal. Don’t look at how much you invested; look at the current value of all your SIPs and lump-sum investments.
- Stocks: Log in to your demat account. What is the current market value of your entire portfolio?
- Employee Provident Fund (EPF/PF): This is a huge asset for most salaried people. Log in to the EPFO portal and check your passbook for the total balance.
- Public Provident Fund (PPF): Check your bank portal or passbook for the current balance.
- National Pension System (NPS): Log in to your NPS account and find the current value of your fund.
- Other Investments: This could include bonds, company stock options, ULIPs (check the surrender value), etc.
3. Real Estate Assets
This is often the largest asset for many people. The key here is to be realistic.
- Your Primary Home: What is the current, realistic market value of your home? This is not what you bought it for. Look at prices for similar homes in your area on a site like Magicbricks or 99acres. Be conservative. What could you actually sell it for today?
- Investment Properties: Do the same for any other flats, houses, or land you own.
4. Personal Assets
This category can be tricky. We are not talking about sentimental value. We are talking about the resale value. Be honest and conservative.
- Your Car/Motorbike: What is its current resale value? Check sites like Cars24 or OLX for a realistic estimate. A car you bought for ₹10 lakhs might only be worth ₹6 lakhs now.
- Gold and Jewelry: What is the value of the gold/silver itself, not the “making charges” you paid?
- Expensive Electronics: Only include this if it has a significant resale value (e.g., a high-end laptop, a very new phone). Honestly, I usually skip this to be more conservative. Your 5-year-old TV is likely worth ₹0 in this calculation.
Now, add up all four categories. That final number is your Total Assets.
Step 2: Calculate Total Liabilities (Facing Your Debts Head-On)
This is the part no one loves, but it’s the most powerful. You must know what you owe. Sticking your head in the sand won’t make the debt disappear. Facing it is the first step to conquering it.
Just like with assets, we’re going to list the total outstanding balance (the principal amount left to pay).
1. “Good” Debt (Secured Debt)
This is typically debt taken to buy an asset that (you hope) will grow in value.
- Home Loan: This is the big one. Log in to your bank’s loan portal. Find the outstanding principal amount. This is not your original loan amount.
- Education Loan: What is the total outstanding balance?
2. “Bad” Debt (Unsecured or Depreciating Debt)
This is debt used for things that lose value (like a car) or for consumption (like a vacation). It’s often high-interest and should be a priority to pay off.
- Credit Card Debt: This is critical. Do not write down your “minimum amount due.” You must list the total outstanding balance on all your cards. If you pay it off in full every month, this number might be ₹0. But if you have a rolling balance, you must list it.
- Car Loan: What is the outstanding principal left to pay?
- Personal Loans: List the total outstanding amount for any personal loans.
- “Buy Now, Pay Later” (BNPL): Don’t forget these! Add up any outstanding EMIs from services like Simpl, ZestMoney, or other EMI cards.
3. Other Loans
- Loans from Family or Friends: Be honest. This is a liability. List what you owe.
Now, add up all these numbers. This is your Total Liabilities.
Putting It All Together: A Simple Example in Rupees
You have your two big numbers. You know the formula. Let’s plug them in.
To make this crystal clear, let’s create a fictional person: Rohan.
- Rohan is 32.
- He’s a salaried person working in marketing in Pune.
- He’s married and has one child.
- He’s trying to build wealth but isn’t sure where he stands.
Let’s do the math for him.
Step 1: Rohan’s Assets (What he owns)
Rohan grabs a notebook and lists everything:
- Liquid Assets:
- Savings Account: ₹1,50,000
- Fixed Deposits: ₹3,00,000
- Investment Assets:
- Mutual Funds (Current Value): ₹7,20,000
- EPF (Provident Fund): ₹5,50,000
- PPF Account: ₹1,80,000
- Stocks: ₹1,00,000
- Real Estate Assets:
- His Apartment (Current Market Value): ₹60,00,000
- Personal Assets:
- Car (Resale Value): ₹3,50,000
- Gold (Family Jewelry): ₹2,00,000
Rohan’s Total Assets =
₹1,50,000 + ₹3,00,000 + ₹7,20,000 + ₹5,50,000 + ₹1,80,000 + ₹1,00,000 + ₹60,00,000 + ₹3,50,000 + ₹2,00,000
= ₹85,50,000
Step 2: Rohan’s Liabilities (What he owes)
Now, Rohan takes a deep breath and lists his debts:
- “Good” Debt:
- Home Loan (Outstanding Principal): ₹42,00,000
- “Bad” Debt:
- Car Loan (Outstanding): ₹2,10,000
- Credit Card Balance (rolling from a recent trip): ₹60,000
Rohan’s Total Liabilities =
₹42,00,000 + ₹2,10,000 + ₹60,000
= ₹44,70,000
Step 3: The Final Calculation
$$\text{Net Worth} = \text{Total Assets} – \text{Total Liabilities}$$
$$\text{Net Worth} = ₹85,50,000 – ₹44,70,000$$
Rohan’s Net Worth = ₹40,80,000
So, Rohan is “worth” ₹40.8 lakhs.
This number tells him everything. It shows him that his apartment is his biggest asset, but his home loan is also his biggest liability (which is normal). It shows him that his investments (MFs, PF, etc.) are growing nicely. And it shows him that his “bad” debt (car + credit card) is relatively small and manageable.
He’s in a great position. His goal for next year is to get that net worth to ₹50 lakhs by aggressively investing and paying down his car loan.
Answering Your Questions (FAQs)
How to calculate net worth in rupees?
As we just saw with Rohan’s example, the process is exactly the same, you just use rupees (₹) as your currency. The formula (Assets – Liabilities) is universal.
The only tricky part is if you have assets in other currencies. For example, if you own $1,000 worth of US stocks.
In that case, you must convert it. If the current exchange rate is $1 = ₹83, you would list that asset as ₹83,000 on your sheet. Always be consistent and convert everything to your home currency (rupees) for the final calculation.
How to calculate a net worth of a salary person?
The example with Rohan is perfect for a salaried person. The key things for a salaried person to remember are:
- Don’t Forget Your PF: Your Employee Provident Fund (EPF) is a massive asset. Many people forget to include it.
- Use Your Salary to Grow Your Net Worth: Your salary is the engine. Your net worth is the score. Use your monthly income to do two things:
- Increase Assets: Invest in SIPs, PPF, stocks, etc.
- Decrease Liabilities: Pay your EMIs and, if possible, pre-pay high-interest loans.
- Your Salary is Not an Asset: You cannot list your future salary as an asset. Only list the money you already have.
Common Mistakes to Avoid When Calculating Your Net Worth
When I first did this, I made a few mistakes. Here are some common traps to avoid:
- The “Sentimental Value” Trap: You love your 10-year-old car, and it’s “priceless” to you. But in a net worth calculation, it’s worth its ₹70,000 resale value. Be objective.
- Using the “Original Price” Trap: You bought your house for ₹40 lakhs in 2015. It’s not worth ₹40 lakhs now. It’s worth its current market value (e.g., ₹75 lakhs). The same goes for your car, which you bought for ₹8 lakhs and is now worth ₹3 lakhs.
- Forgetting “Hidden” Assets: That old PPF account you opened in your first job? That small-cap mutual fund you invested in and forgot? Find them. They all count.
- Ignoring Small Debts: That ₹5,000 “pay later” balance? That ₹10,000 you borrowed from your brother? They all count. Be thorough.
- Calculating It Too Often: This is a big one. Don’t calculate your net worth every day. Your investments will fluctuate, and it will drive you crazy. This is a “big picture” number.
I Have My Number… Now What?
You did it. You have your number.
What if it’s negative?
First: Do not panic. This is extremely common, especially if you are young. If you have an education loan of ₹20 lakhs and only ₹2 lakhs in savings, your net worth is -₹18 lakhs. This is not a failure. It’s your starting line. You invested in yourself (an asset!) and the “liability” is the cost. Your goal is to get that number to zero, and then into the positive.
What if it’s positive?
Great! This is your baseline. Your mission, should you choose to accept it, is to make that number grow, year after year.
How Often Should You Calculate It?
I recommend doing this exercise once every six months or, at the very least, once a year (perhaps on New Year’s or your birthday).
It’s your personal financial check-up. It lets you see if you’re on track, if your investments are working, and if your debts are shrinking.
Calculating my net worth has become a ritual for me. It’s a quiet half-hour where I get to be the “CEO” of my own life, looking at the balance sheet. It gives me clarity, motivation, and, most importantly, control.
Your net worth isn’t about bragging. It’s not about comparing yourself to anyone else. It’s about you vs. you. It’s the most honest tool you have to build a life of financial freedom.
You owe it to your future self to know your number. Take an hour this weekend. You might be surprised at what you find.