What Is Net Worth?
Your net worth is the difference between what you own (your assets) and what you owe (your liabilities). It is the single most comprehensive measure of your financial health — more useful than income alone, because it accounts for savings, investments, property, and debts all in one figure.
Net Worth = Total Assets − Total Liabilities
A positive net worth means you own more than you owe. A negative net worth — common in your twenties if you have student debt and no property — is not unusual and does not mean you are in financial trouble, as long as the trend is moving in the right direction.
Why Tracking Net Worth Matters
Your salary tells you how much money flows in each month, but your net worth tells you how much wealth you have actually built. Tracking it over time helps you:
- Measure real progress — a pay rise means little if your debts are growing just as fast.
- Stay motivated — watching the number climb, even slowly, reinforces good financial habits.
- Spot problems early — a declining net worth may signal overspending, under-saving, or growing debt.
- Plan for the future — retirement planning, property goals, and financial independence all depend on accumulated wealth, not just current income.
Common Assets to Include
When calculating your net worth, include the current market value of everything you own:
- Property — your home’s estimated value (use recent sold prices on Rightmove or Zoopla as a guide).
- Pension pots — check your workplace pension dashboard and any personal or SIPP pensions. Do not forget to include your State Pension entitlement if you are close to retirement.
- ISAs — Cash ISAs, Stocks & Shares ISAs, and Lifetime ISAs.
- Savings accounts — current balances across all banks and building societies.
- Investments — general investment accounts, premium bonds, and any other holdings.
- Vehicles — the current esae value of any cars, motorbikes, or other vehicles. Use guides like Auto Trader or Parkers for valuations.
- Other valuables — jewellery, collectibles, or other items of significant value, though be conservative with estimates.
Common Liabilities to Include
Subtract everything you owe:
- Mortgage balance — the outstanding capital on your home loan, not the original amount borrowed.
- Credit card debt — the total balance across all cards.
- Personal loans — any unsecured borrowing from banks or other lenders.
- Student loans — the outstanding balance, though see the FAQ above for whether you should include this.
- Car finance — PCP, HP, or personal contract hire balances.
- Overdrafts — any used overdraft balance.
- Other debts — money owed to family, buy-now-pay-later balances, or any other obligations.
Average Net Worth in the UK by Age
The following table shows median household wealth (including property, pensions, financial assets, and physical wealth) for the youngest and oldest-peaking age groups, based on the ONS Wealth and Assets Survey for Great Britain, April 2020 to March 2022:
| Age of household head | Median household wealth |
|---|---|
| 16–24 | £15,200 |
| 65–74 (the peak) | £502,500 |
| All households | £293,700 |
These figures are heavily influenced by property ownership and pension values, which account for most household wealth in Great Britain. After state pension age, household wealth often starts to decline as pension wealth is used in retirement.
It is worth noting that averages can be misleading: wealth distribution in Great Britain is highly skewed: the wealthiest 10% of households had £1,200,500 or more, while the least wealthy 10% had £16,500 or less (ONS, April 2020 to March 2022).
How to Increase Your Net Worth Over Time
Building net worth is a long-term endeavour. The most effective strategies include:
- Pay down high-interest debt first — clearing credit card debt at 20%+ APR delivers a guaranteed “return” far higher than most investments.
- **Maximise pension contributions** — employer matching is free money, and tax relief effectively boosts every pound you contribute. Use salary sacrifice where available.
- Build an emergency fund — three to six months of essential expenses in an easy-access savings account protects you from taking on debt when unexpected costs arise. See our emergency fund guide.
- Invest consistently — even small regular contributions into a Stocks & Shares ISA can grow substantially over time thanks to compound interest.
- Live below your means — the gap between what you earn and what you spend is the single biggest driver of wealth accumulation. A solid budget makes this visible.
- Increase your income — career progression, side income, or upskilling can accelerate wealth building, especially when the extra income is saved and invested rather than spent.
Related Tools and Guides
- Budget Planner Guide — How to Build a Budget That Works
- Compound Interest Calculator — See How Your Money Grows