Why track net worth
Income tells you what flows in each month; net worth tells you what's actually accumulated. The trend matters more than the absolute number — recompute every quarter and watch it climb. A rising net worth despite stable income means your savings rate plus investment returns are doing the work.
Reasonable benchmarks
- Debt-to-asset ratio < 40% is generally healthy. Above 60% is stress-zone for most households.
- Liquid assets ≥ 6 months of expenses for emergency cover before considering wealth-building.
- Net worth ≥ age × annual income / 10 is a rough "on-track" rule (the Stanley/Danko PAW formula).
FAQ
What value should I use for my home?
Current market value (what you'd realistically sell it for today), not the purchase price. Check recent comparable sales in your locality. Some prefer a conservative 90% of comp value to bake in selling costs.
Should I include things like jewellery and electronics?
Generally no for electronics (depreciate fast, hard to sell). Yes for jewellery, art, collectibles at fair market value if material. Vehicles depreciate but still have resale value — include them at current Blue-Book value.