Net worth is the simplest and most complete measure of financial health. Unlike income (what's coming in) or debt (what you owe), net worth tells you where you actually stand — what you'd have left if you liquidated everything and paid off everything you owe.
The Formula
Net Worth = Total Assets − Total Liabilities
What Counts as an Asset?
- Cash and savings: Current accounts, savings, ISAs, premium bonds
- Investments: Stocks, bonds, funds, pensions — include pension value, it's often the largest asset
- Property: Current market value (not what you paid for it)
- Vehicles: Current resale value, not purchase price
- Business equity: Your stake in any business at current valuation
What Counts as a Liability?
- Mortgage balance(s)
- Car loans, personal loans, student loans
- Credit card balances
- Any other outstanding debt
Average UK Net Worth by Age
Age GroupMedian (UK)Note
Under 35~£30,000Often negative if student debt
35–44~£155,000Property equity starts building
45–54~£290,000Peak earning and saving years
55–64~£430,000Pension wealth growing
65+~£500,000Largely pension and property
These figures skew high due to property wealth. Negative net worth in your 20s from student loans is entirely normal.
Why Monthly Tracking Changes Everything
Tracking net worth monthly — even in a simple spreadsheet — creates a feedback loop that changes financial behaviour almost automatically. You start seeing the real long-term cost of debt, the compound effect of consistent investing, and the true impact of spending decisions. Most people only track income and expenses. Net worth is the scoreboard that actually matters.