Whether you’re new to the financially focused club, or you’ve been a member for a while- odds are that you’ve heard about the term “net worth”. It’s also very likely that you’ve probably heard it discussed, and compared, frequently. It’s an integral part of any financial journey, and knowing your own personal net worth (aka financial position) is a major stepping stone towards sorting out your finances and working for financial freedom. So how exactly does one calculate their personal financial position?

First off, what makes up your financial position?

Your personal financial position is the dollar-value number that you have left when you subtract your liabilities from your assets. Quite simply:

Net Worth = Assets – Liabilities.

Your net worth is the difference between what you already have/own and what you owe to others, whether it be the bank, a private lender, etc. If the value of your assets exceeds the value of your liabilities then you have a positive net worth. However, if the value of your liabilities is greater than that of your assets you have a negative net worth.

Your net worth is a number that changes frequently, as life does, and it is important to understand what that figure is during big life decisions, such as when you’re planning for a new large purchase, a holiday, a baby, or retirement. Let’s walk through why this is so important- and then how to calculate it.

Why is knowing your financial position important?

Tracking your net worth over time is one of the single most helpful indicators of your overall financial stability. Spending time looking into your personal net worth can help you to understand the state of your finances, as well as where all your money has gone in the past. It can be used as the starting point for deciding where you want your money to go moving forwards. Knowing your net worth can help you see the big picture and plan for your future.

Calculating your personal financial position can be difficult, as it forces you to confront the realities of your financial health. But the process of reviewing your situation over time can help you determine the direction your finances are taking- whether it be positive or negative – and make appropriate changes. This can be incredibly useful not just for the trend insights, but to also give you encouragement when you are heading in the right direction or provide you with a very firm wake-up call if you’ve fallen off-track.

It is recommended that you review and calculate your financial position periodically and track the number as a kind of financial journey report card. Use it to stay on track, and to plan your next few moves and years as you strive to reach your financial goals.

The bottom line is: if you want to increase your net worth then you need to start tracking your net worth first! So, let’s get started- and create your very own personal balance sheet.

Tracking your Net Worth


The first step is to gather up a list of all of your assets, and their current values. Your assets include anything that you own of value that could be converted into cash or are already in cash. For example: any investments that can be liquidated on short notice, bank accounts, real estate and personal property (vehicles, jewelry, and collectibles).

A comprehensive list of potential assets has been outlined below:

1. Cash/financial objects with immediate access:

Savings account

Checking account

Non-retirement investments/brokerage account

2. Retirement accounts:

Superannuation account

Self-managed super fund

3. Any accounts for your kids

4. Any potential business ownership you may have:

Company stock

Private equity

5. Real Estate

Your principal place of residence (PPR)

Your holiday home

Your investment property

6. More complex assets

Any family or other types of trusts

Collectibles of value (jewellery, art, etc.)

7. Your car (unless it is leased)

8. Livestock or expensive animals (such as a competition horse)

Once you have all of your assets listed, add them up in a table. You can do this with paper and pen, or on Excel. Ensure that you are using the most up to date values for each of the assets so that you have an accurate picture of your current assets.

Got the total? Great! That’s the total value of your assets!


The next step in determining your personal financial position is to make a list of your debts, each with the following key pieces of info:

The total amount owed & the current interest rate

It is very important to establish the interest rate for each of your liabilities. The next step is to collate every liability you have against your name. Some examples of liabilities or debts you may have are:

  • Your outstanding credit card balances
  • Any bills (especially any past due)
  • Any taxes you owe the ATO
  • Any car loans (or the total of your future lease payments)
  • Any HECS debt you still have
  • All of your outstanding property loans, such as:
    • Your mortgage(s)
    • Any home equity loan(s)
    • Any investment property loan(s)
  • Personal loans owed to a bank or financial institution
  • Any purchases made with finances or BNPL, such as Afterpay or ZipPay
  • Any money you owe to family or friends

Got a record of all outstanding liabilities? Great! Now make sure you have the most up to date figure of what you owe, and what the interest rate is. The total that you owe is your total liability.


Step 3 is by far the simplest step: it’s a simple subtraction! As we discussed at the beginning of this article, your net worth is your total value of assets minus your total value of liabilities. So, simply subtract your liabilities from your assets- and boom! You have your net worth!

Now you know your personal financial position- so what?

As we outlined earlier, knowing your current net worth is the starting point for building your roadmap to financial freedom. Now that you have an accurate, up to date picture of your assets, your liabilities and your overall position it’s time to set up your next steps to make sure your net worth number goes up!

Many people like to tackle this through a debt elimination strategy. Reviewing your liabilities list, are you of these debts causing you financial stress? Which debt has the highest interest rate? Which one could you pay off the quickest?

There are a number of ways to increase your net worth through reducing your liabilities. One of the most popular ways is called the Avalanche method. This is where you order your debts from highest to lowest, but not by what you owe, by the interest rate!

You then pay off your debts from the ones with the highest interest rate to the lowest, eliminating your liabilities and getting rid of the ones that cost you the most in interest!

Obviously this strategy is not suitable for everyone, which is why it is so important to check in with your financial adviser about the best ways to eliminate your debt to improve your financial health. A good financial adviser will also be able to help you with other strategies to increase your overall net wealth, such as showing you how to start investing. If you’re interested in learning how to start investing, we have a previous article on the topic here.

If calculating your net worth has left you feeling deflated or frustrated, then it is incredibly important to remember that no matter where you stand today, your current personal financial position is not wholly indicative of your future net worth. You can always make strategic choices to improve your financial wellbeing in the long term.

We hope this guide has encouraged you to take a look at your finances and understand your net worth. Should you have any further questions, our friendly team would be happy to help! If you are looking for personalised advice on how to improve your financial situation, the guidance of a financial adviser is recommended. You can book in for a complimentary 15 minute ‘Quick Chat’ via this link

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Pursue Wealth Pty Ltd is a wholly owned subsidiary of Grimsey Wealth. Pursue Wealth’s Financial Advisers are Authorised Representatives of Grimsey Wealth Pty Ltd, ABN 90 113 911 247 AFSL 293334

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