Key Takeaways

• • • • • • • • Net worth is what you own minus what you owe.
              • Income doesn’t count. What matters is what you save, invest, and keep.
                
              • Tracking net worth helps you see if you should pay down debt, save more, or invest.
              • Digital tools like Lake City Bank Digital make it easier to see your full financial picture.

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    Your net worth is a good way to understand your overall financial health. The good news? It’s easy to figure out.

    Net worth equals what you own minus what you owe, or assets minus liabilities. To calculate your net worth, start by adding up what you own (assets):

    Assets are things that have value. This includes:

    • Money in your checking and savings accounts
    • Retirement accounts like a 401(k)
    • Investments like stocks or mutual funds
    • Your home or car (use the current value, even if you’re still paying for it)

    Example: If your house is worth $200,000 and you owe $150,000 on the mortgage, your house adds $50,000 to your net worth.

    Likewise, add up your liabilities, or what you owe to others:

    • Revolving consumer debt, like what you owe on credit cards, as well as personal loans and payday loans
    • Your mortgage balance, such as the $150,000 from the example above, and what you owe on any home equity loans you may have
    • The remaining balance on your car loan

    To determine your net worth, subtract your liabilities from your assets.

    If you use digital banking, some platforms like Lake City Bank Digital allow you to link all your accounts—even ones from other financial institutions—so you can view your full financial picture in one place. This can make it easier to track your assets and liabilities when calculating your net worth.

    Why is Net Worth Important?

    Net worth is the starting point for determining your overall financial health. More importantly, net worth shows what you need to do next financially. For example, are you saving enough for retirement, emergencies, and your children’s education? Are your liabilities more than you’re comfortable with?

    Net worth is not about how much money you make—it’s about what you’ve kept after paying off what you owe. For example, you may have significant investments, but if you have liabilities to match, such as mortgages, credit card bills and other debt, your net worth balances out to zero, indicating that you need to concentrate on eliminating those liabilities.

    Likewise, you may notice that income is not included in your net worth. That’s because salary only counts based on what you do with it. Saving and investing, even starting small, builds your net worth. Using your income to cover bills is helpful but doesn’t build net worth unless you stop spending and eliminate liabilities.

    What’s next?

    With your net worth calculation as a starting point, you can plan your next financial move, whether that’s paying down your outstanding bills, saving toward your next goal, or determining what you need for retirement. Need help? Your banker has tools to help you reach your financial goals.