Why You Should Track Your Net Worth (And How to Start)

Most people measure their financial progress by income. But a high salary doesn’t guarantee wealth — plenty of six-figure earners live paycheque to paycheque. Net worth is a far better indicator of where you actually stand financially.

What Is Net Worth?

Net worth is simple: it’s everything you own minus everything you owe.

Net Worth = Total Assets - Total Liabilities

Assets include your savings accounts, investments, retirement funds (RRSP, TFSA), real estate, vehicles, and other valuables. Liabilities include your mortgage, car loans, student debt, credit card balances, and any other debts.

If you own $350,000 in assets and owe $200,000, your net worth is $150,000. If your debts exceed your assets, your net worth is negative — and that’s more common than you might think, especially for recent graduates.

Why Net Worth Matters More Than Income

Income is what flows in. Net worth is what you keep. Consider two people:

• Person A earns $120,000/year but has $40,000 in credit card debt, a $600,000 mortgage, and $15,000 in savings. Net worth: negative $225,000 (assuming the home is worth $400,000).
• Person B earns $65,000/year but has $180,000 in investments, no debt, and a paid-off car. Net worth: $195,000.

Person B is in a dramatically stronger financial position despite earning almost half as much. Tracking net worth keeps you focused on what truly builds wealth: the gap between earning and spending, invested over time.

How to Calculate Your Net Worth

Set aside 30 minutes and gather these numbers:

1. List all assets — check bank balances, investment accounts, retirement accounts, and estimate the current market value of property and vehicles
2. List all liabilities — pull up mortgage statements, loan balances, credit card balances, and any money you owe
3. Subtract liabilities from assets — the result is your net worth

Don’t stress about precision. The goal is a reasonable estimate that you can track over time, not an accounting audit.

Net Worth Benchmarks by Age

These Canadian benchmarks are rough guidelines, not rigid targets:

• Age 25: $0 to $25,000 — many people are still paying off student loans
• Age 30: $50,000 to $100,000 — early career savings and possibly home equity
• Age 40: $200,000 to $400,000 — investments and home equity growing
• Age 50: $500,000 to $800,000 — peak earning years with compounding in full effect
• Age 60: $800,000 to $1.5 million — approaching retirement readiness

If you’re below these ranges, don’t panic. The purpose of tracking is to establish a baseline and improve from there.

How to Improve Your Net Worth

There are only three levers:

• Increase income — negotiate raises, develop new skills, start a side business
• Reduce spending — cut subscriptions, reduce housing costs, avoid lifestyle inflation
• Grow your assets — invest consistently in diversified, low-fee index funds and maximize tax-advantaged accounts like RRSPs and TFSAs

The most powerful strategy is to combine all three. Even modest changes — investing an extra $300/month — compound into substantial wealth over 20 to 30 years.

Start tracking your net worth today, even if the number isn’t where you want it. Awareness is the first step toward improvement, and watching that number grow month after month is one of the most motivating things in personal finance.

Related Tools

• Net Worth Calculator — calculate your net worth by listing assets and liabilities
• Retirement Calculator — estimate how much you need to retire comfortably
• Budget Calculator — plan your spending to grow your net worth faster