Your net worth is all of your assets minus your liabilities. In simple terms, it’s everything you own minus what you owe. Knowing your net worth can be helpful since it gives you an idea of your financial independence and stability.

It’s a good idea to update your net worth once a year. By doing this, you can see how your money has performed in the past and then decide what to do in the future. It’s perfectly normal for your net worth to fluctuate since your assets may change, but in an ideal world, it would continue to go up.

That said, it’s not healthy to obsess over your net worth. Any investments you have may fluctuate in value, so your net worth could go down at any moment. Knowing your net worth is more of a long-term money management strategy as you plan your next financial move.

How to calculate net worth

To calculate your net worth, you must first inventory what you own (assets) and what you owe (liabilities).

Once you know what you’re working with, you can follow this basic formula:

Assets – liabilities = Net worth

Note that this formula does not include income. Sure, both active and passive income helps your cash flow, but a high salary does not automatically translate to a high net worth. Someone with a modest wage could easily have a high net worth by diligently saving and investing money.

Net worth assets

Anything of value that you own would be considered a personal asset, such as:

Cash on hand, such as in your chequing or savings accounts
Registered retirement savings plans (RRSPs)
Tax-free savings accounts (TFSAs)
Non-registered savings and investments, like mutual funds
Employer pension plans
Registered education savings plans (RESP)
Your primary residence (if you own)
Additional properties
Vehicles
Other valuables

When it comes to your property value, use what it is currently worth instead of the price when you bought it.

As for your investments, always use the current market value instead of the book value. Some people won’t include any RESPs in their net worth since those funds are meant for their children. But, technically speaking, that money does belong to the subscriber. Once that RESP gets paid out, you could remove it from your list of assets.

As far as other valuables are concerned, you could consider jewelry, physical precious metals, collectibles, etc. Try to use the current resale value instead of the book value of these items when determining your net worth.

Net worth liabilities

Liabilities include anything you owe, such as

Student loans
An outstanding balance on a mortgage
Credit card debt
Auto loans
Line of credit
Other loans

How does your net worth stack up?

The Canadian government does regular surveys of financial security. The most recent results are from 2019 and do not factor in the effects of the COVID-19 pandemic. However, it does give you an idea of how Canadian households were doing.

Net worth by age in Canada

	1999 Median net worth	2016 Median net worth	2019 Median net worth
Household (economic families and persons not in an economic family)	$153,100	$312,500	$329,900
Under 35	$26,000	$37,200	$48,800
35 to 44	$139,500	$232,600	$234,400
45 to 54	$272,800	$457,700	$521,100
55 to 64	$395,800	$709,200	$690,000
65 and older	$302,500	$547,700	$543,200

As of 2019, the median net worth of Canadian economic families (two or more persons) was $329,900. The net worth of the major income recipient in each household, made up of both individuals and economic families, is also broken down above by age.

Overall, the net worth of Canadian families has only increased by 1.8% per year from 2016 to 2019. That growth rate hardly beats inflation, so you could argue that most families have seen a decrease in their net worth in recent years.

Real estate is both the largest asset and debt for Canadians. It’s no surprise that residents of Ontario and British Columbia have the highest median net worth since those provinces have some of the highest real estate prices in the country.

Finally, families that rent, younger families, single parents, renters and non-attached seniors typically have a lower net worth.