Never bothered to calculate your net worth? It’s real easy math (promise)

For this week’s Reality Cheque, we’re looking at the right way to calculate your net worth so you don’t leave money on the table. 

Exactly how rich are you? Surprisingly, many people never calculate their own net worth, often assuming it involves mind-numbing homework (picture the confused math lady meme with floating trig equations). 

But if you can add and subtract, or just input numbers into one of the many net-worth calculators freely available online, you can figure out your total wealth in roughly 15 minutes (or less). There are even AI-based tools to help (and here are 10 AI prompts that will help you save money). For long-term planning or peace of mind, it’s helpful to have this big-picture snapshot of your finances, no matter how much you earn or have in the bank.

What’s normal? What’s average? According to Statistics Canada research conducted in 2023, the median net worth of all Canadian families is $519,700. But this “middle” number doesn’t tell the whole story. What’s “normal” net worth varies wildly depending on the circumstances.

Canada’s wealthiest families were typically the ones with a major income earner nearing retirement age (55 to 64), plus home ownership and an employer-sponsored pension plan. These families had a median net worth of $1.4 million. Families who rented and also lacked an employer-sponsored pension plan had the lowest median net worth: $11,900. 

Instead of comparing your wealth to what’s “normal,” think of calculating net worth as a way to compare yourself to yourself over time (more on this later). 

To demystify this topic, we spoke with three Canadians about calculating net worth, and why it’s worth knowing yours.

What is net worth? 

The most basic definition: “It’s the total value of all your assets, minus what you owe,” says Samantha Sykes, senior investment advisor at Sykes Wealth Management of Raymond James. And many people don’t know their number. “Canadians in general don’t tend to talk about money, and net worth does feel like one of those bragging things.” But it’s also a key measure of your personal financial health, she adds. 

If you want to calculate this the ol’-school way, with pen-on-paper or a DIY spreadsheet, you’ll want to add up the value of everything you own, including: 

• Chequing and savings accounts, and cash on hand 
• Investments such as stocks and bonds
• Retirement accounts
• Real estate (realistic estimate for the value of your property, not what you think or hope it’ll sell for)
• Personal property like your vehicle, expensive jewellery or fine art (again, the current values, not what you paid for the purchases)

Then subtract all your liabilities, including your:

• Mortgage
• Car loan
• Student loan
• Credit card balances
• Line of credit
• Anything else that’s an outstanding debt

Even simpler than doing this math manually? Free net-worth calculators abound online.

“Why track your net worth? It’s benchmarking against yourself. It measures your financial health and provides a more complete picture than cash flow or income alone. So monitoring it year over year, quarter over quarter, helps people set goals,” says Sykes. “It acts as a roadmap for a long-term savings goal.” 

So what’s a “good” net worth to aim for? “There isn’t any guide. People have to determine their goals for themselves,” says Sykes, but the wisdom of a financial planner can always help. 

How often should you calculate your net worth?

Sykes likens calculating net worth to tracking your weight: do it as often as is good for your mental health, but don’t avoid doing it. She personally favours calculating it quarterly. Sykes also recommends determining your household wealth (if you’re partnered) and your individual wealth, just in case your life circumstances change. 

Some Canadians never calculate their net worth—but others do it like clockwork. Andrew (who has kept his last name private for personal security), a millennial solopreneur in a creative field, always calculates it on the first morning of every month, starting up his Excel spreadsheet before he even has breakfast. “It’s not hard. You just add up what you got in your banks and then you subtract (liabilities),” he says. It’s even faster for the self-described “natural saver”: He’s never had any debt or even paid a credit card late. 

He’s motivated by the desire to have a full picture of his finances, especially through the ups and downs of being a small business owner. “I have a lot of my life savings in the stock market. So in months when I’m not making a lot of money (in income), being able to see a trend in net worth is helpful,” Andrew explains. For him, it’s all part of being financially literate.

“This is gonna sound very nerdy, but when I do my finances and I can see that my net worth increased by $20,000 in one month? That is so satisfying,” he says. It’s also useful for keeping tabs in the long run: “It’s nice to be able to know that 10 years ago, my net worth was $100,000. And now, it’s more than $480,000. So it’s gone up by more than four times in 10 years.” 

Calculating your net worth for the first time

Despite being a diligent budgeter and white-collar professional, Christina (who also kept her last name private for personal security) had never calculated her net worth before The Get asked her to do the math. “I thought it would be something a bit complicated, so it just never crossed my mind,” she explains. “Generally speaking, I do not control the household finances. I weigh in on them, but it’s not something I take the lead on.” 

Christina tried a free net-worth calculator, and it took just a few minutes to finish. “It told me my net worth is more than $1.5 million, which put me in a category that was better than a lot of Canadians. I was surprised,” says Christina, explaining that the costs of living, especially factoring in kids’ expenses, can feel like a struggle. 

Going through the process of calculating net worth had a few upsides: “It did make me do a bit of research,” she explains. For example, the calculator asked about the amount in her tax-free savings account (TFSA), which prompted her to compare the choices offered at a new job: TFSA matching versus RRSP (registered retirement savings plan) contributions versus stock options. 

The exercise was also a discussion starter at home: “It made me have a couple of financial conversations with my husband that I normally wouldn’t have instigated, so I think he was pretty pleased about that,” Christina says. “It did make me feel like I know a little more.”

Read more from this issue of The Get:

1. Mother Knows Best: The best financial advice from Canadian moms
2. MVP: Carlene Higgins on starting a beauty brand at 50
3. How to teach kids about money, even if they’d rather spend than save
4. Understanding debt consolidation and how to choose the right credit option