HOW TO CALCULATE YOUR NET WORTH

KidVestors
May 10
5 min read

Updated: Jun 1

What you'll learn:

What is Networth and how to calculate it?
The difference between assets and liabilities
Examples of assets and liabilities
Income vs. net worth
Real millionaires vs. paper millionaires
How to teach your kids and teens about creating assets and generating wealth

Let’s talk about a term that sounds fancy but is actually super practical: net worth.

It’s one of those financial phrases we hear tossed around in news headlines or celebrity gossip —“So-and-so has a net worth of $50 million!” But what does that actually mean? And more importantly, what can it teach our kids (and maybe even us grown-ups) about building real wealth?

Whether you're a parent trying to make sense of your own finances, or raising the next Warren Buffett, understanding net worth is a game-changer. Let’s break it down the KidVestors way, fun, simple, and straight to the point.

What Is Net Worth and How Do You Calculate It?

At its core, net worth is just a math problem:

Net Worth = Assets – Liabilities

That’s it. Your net worth is what you own minus what you owe.

So, if you own a house worth $300,000, a car worth $20,000, and have $10,000 in savings, your total assets are $330,000. If you owe $200,000 on your mortgage, $5,000 on a car loan, and $15,000 in student loans, your total liabilities are $220,000.

$330,000 – $220,000 = $110,000

Your net worth? $110,000

And yes, this formula works whether you’re 13 or 35. It gives you a snapshot of your financial health and tells you how much you’re really worth after debts are paid.

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What’s the Difference Between Assets and Liabilities?

Let’s go a little deeper, because this is where a lot of people get tripped up.

Assets are things you own that have value. Think:

Cash and savings
Stocks and investments
Real estate (like your home or rental properties)
Cars
Jewelry or collectibles (in some cases)
Businesses you own

Liabilities, on the other hand, are things you owe. This includes:

Credit card debt
Student loans
Car loans
Mortgages
Any other borrowed money

Think of it this way: if your financial life was a backpack, assets are what you're carrying that help you move forward, while liabilities are the heavy books slowing you down. Your net worth? It’s the weight after you subtract those heavy books.

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Real-Life Examples of Assets vs. Liabilities

Let’s say you’re a high schooler with a summer job. You’ve saved $500, and you also own a bike worth $300. That’s $800 in assets.

Now, say you borrowed $200 from your older sibling to buy a new phone. That’s a liability.

Your net worth would be $800 – $200 = $600

Or for the adults: You own a home valued at $400,000, have $100,000 in your retirement account, and a paid-off car worth $15,000. That’s $515,000 in assets.

But you also owe $250,000 on your mortgage and $5,000 in credit card debt.

Your net worth? $515,000 – $255,000 = $260,000

Notice how the credit card debt (liability) chips away at your net worth even if you're "doing well." That’s why it’s not just about how much money you make, but what you keep.

Net Worth Calculator

If you want to assess the strength of your financial health and financial situation learn how to use our net worth calculator below.

Income vs. Net Worth: Not the Same Thing

Here’s a common trap: People confuse income with wealth. But just because someone makes six figures doesn’t mean they’re wealthy.

Income is what you earn. Net worth is what you keep after all your expenses and debts.

Let’s look at two people:

Alex earns $200,000 a year but spends $195,000. They have lots of credit card debt and very few assets. Their net worth might be barely above zero—or even negative.
Jordan earns $60,000 a year, lives below their means, saves and invests, and avoids debt. Over time, Jordan’s assets grow and liabilities shrink. Their net worth could be $100,000 or more.

So while Alex may “look” richer on paper (or on Instagram), Jordan’s actually building long-term wealth.

Wait, If I’m a Millionaire, Where’s My Million?

Ah yes, the classic misconception: If someone has a net worth of a million dollars, that doesn’t mean they’re sitting on a million in cold, hard cash.

Let’s break it down. Imagine you own:

A home worth $700,000
A business worth $200,000
$100,000 in investments

That’s $1,000,000 in assets. But if you owe $300,000 on your mortgage and another $50,000 in other debts, your net worth is still $650,000. That does not mean you have $650,000 in your checking account.

Now scale that up to billionaires. Many of them are “rich” because of the value of their shares in companies they founded or invested in.

Take Elon Musk or Jeff Bezos. Their net worth is largely tied to stocks and company value, not stacks of cash in a savings account. If Tesla or Amazon stock drops, so does their net worth. That’s why someone can be a paper billionaire (or millionaire) without having that kind of money liquid or spendable.

Some people may have a high net worth but barely any money in their actual bank accounts. The real goal is to have both: a high net worth and liquidity. Being "liquid" means having cash or assets that can quickly and easily be accessed or spent without needing to sell anything first. In other words, you want money that’s available when you need it.

How KidVestors Teaches Kids and Teens About Net Worth

Here’s the good news: You don’t need to wait until adulthood to learn all this. At KidVestors, we break down the concept of net worth in a way that actually makes sense to young learners.

Inside our platform, students:

Learn how to track their assets and liabilities (yes, even if their "asset" is a video game console or allowance)
Play interactive games that show how buying liabilities (like fancy cars) affects your net worth
Set virtual financial goals like buying a rental property, investing in a stock, or starting a business
Earn KV Bucks as they build their own net worth and make smart decisions
Learn that accumulating assets is the key to long-term wealth—not just making money and spending it

We even have activities that challenge students to “flip the script” and turn liabilities into assets. Got an old bike you don’t use? Maybe it becomes a rental business in the game. That’s the power of financial creativity and literacy working together.

Our approach helps kids visualize the long game, understand the impact of debt, and learn how to build wealth, not just spend it.

So, What’s the Big Takeaway?

Here’s the bottom line:

Net worth is a simple but powerful financial snapshot
It’s not about how much you earn—it’s about how much you keep
Assets help you grow. Liabilities hold you back.
A high net worth doesn’t mean a big bank balance—it means you’ve built value
You can be wealthy on paper but still not have cash in hand
And most importantly? It’s never too early to learn this stuff

At KidVestors, we believe financial literacy is a lifelong skill, and it starts now. Whether your kid is eight or eighteen, understanding net worth sets the stage for smart money moves later in life. It helps them avoid common traps, make better decisions, and see wealth as something they build—not something they just spend.

We’re not just teaching kids how to count money—we’re teaching them how to make it count.

Ready to help your child build their first asset? Or maybe revisit your own net worth goals? Join KidVestors and let’s raise the next generation of asset builders and wealth creators.