What Is Net Worth and How Do You Actually Calculate Yours

You’ve probably heard the term “net worth” thrown around in conversations about rich people or retirement planning - and quietly assumed it didn’t apply to you yet. Maybe you’re a student with a part-time job, a new grad with some savings and a pile of student debt, or just starting your first real job and wondering where you actually stand financially. Here’s the truth: net worth isn’t a number only millionaires track. It’s one of the most useful personal finance tools you have, and it works just as well at $500 as it does at $500,000. Understanding yours gives you a clear, honest snapshot of your financial health - not just your bank balance on payday. Once you know the formula, you can calculate it in about ten minutes, track it over time, and start making smarter decisions with every dollar you earn, save, or borrow. Let’s break it down.

What Net Worth Actually Means

Net worth is the difference between what you own and what you owe. That’s it.

Net Worth = Total Assets − Total Liabilities

Assets are everything you own that has value: cash in your chequing account, money in your TFSA or RRSP, investments on Wealthsimple or Questrade, your car (if you own it outright or partially), and any physical items worth real money. Liabilities are everything you owe: student loans, a car loan, credit card balances, a line of credit, a mortgage.

If your assets add up to $18,000 and your liabilities add up to $12,000, your net worth is $6,000. If your student loans outweigh everything you own, your net worth might be negative - and that’s completely normal for someone in their early twenties. The number itself matters less than whether it’s trending in the right direction over time.

How to Calculate Your Net Worth Step by Step

Grab your phone or a piece of paper. You’re going to list two columns.

Step 1 - Add up your assets:

• Chequing and savings accounts (check your actual balances)
• TFSA balance (log into your bank or Wealthsimple)
• RRSP or FHSA balance if you’ve opened one
• Investment accounts (any non-registered accounts too)
• Current value of your car, if you own one
• Any money someone owes you that you expect to get back

Step 2 - Add up your liabilities:

• Student loan balance (check the National Student Loans Service Centre or your provincial loan portal)
• Credit card balances (all cards)
• Car loan remaining balance
• Any personal loans or money you owe a friend
• Line of credit balance

Step 3 - Subtract liabilities from assets.

That’s your net worth today. For example: $4,200 in a TFSA + $1,800 in a chequing account + a $6,000 car = $12,000 in assets. Minus $14,500 in student loans + $800 on a credit card = $15,300 in liabilities. Net worth: −$3,300. Negative, yes. But now you know exactly where you stand.

Quick tip: Don’t include your personal belongings like clothes, furniture, or a laptop unless they’re genuinely resaleable for meaningful money. Overestimating assets is the fastest way to lie to yourself on this exercise.

Why Net Worth Matters More Than Your Paycheque

Your income tells you what’s coming in. Your net worth tells you whether any of it is actually sticking.

Two people can earn the same $55,000 salary in Toronto. One has $8,000 in a TFSA, no debt, and a net worth of $8,000. The other has a newer car, nicer furniture, and $22,000 in credit card and car loan debt - net worth of roughly −$18,000. Same income, very different financial situations.

Tracking net worth over time shows you progress that a monthly budget can’t. Even if your salary hasn’t changed, paying down $200 of debt and adding $200 to your TFSA in the same month means your net worth went up by $400. That’s real, measurable progress. It also helps you spot problems early - if your net worth is flat or dropping month after month despite earning money, something in your spending or debt situation needs attention.

What a Realistic Net Worth Looks Like in Your 20s in Canada

If you’re 22 with student debt, a negative net worth is genuinely normal. The Canadian average net worth for people under 35 is around $100,000 - but that average is skewed upward by people who inherited money or bought property early. Most students and new grads sit somewhere between −$30,000 and +$20,000 depending on their debt load and savings habits.

The goal in your early-to-mid twenties isn’t to hit some magic number. It’s to build the habit of tracking it and to move the number in a positive direction consistently. Opening a TFSA and putting even $50 a month into it on Wealthsimple is a move that shows up in your net worth. Paying an extra $30 toward your student loan every month shows up too. Small, consistent actions compound faster than most people expect.

Frequently Asked Questions

What is net worth in simple terms?

Net worth is what you own minus what you owe. Add up all your assets - cash, savings, investments, the value of your car - then subtract all your debts. The result is your net worth, and it can be positive or negative.

Is it normal to have a negative net worth in your 20s?

Yes, completely. If you have student loans, a car loan, or credit card debt that outweighs your savings and assets, your net worth will be negative. This is very common for Canadian students and new grads. What matters is the direction it’s moving over time.

Should I include my TFSA and RRSP when calculating net worth?

Yes. Your TFSA balance, RRSP balance, and FHSA balance all count as assets when calculating your net worth. Even if you can’t touch your RRSP without tax consequences right now, it still represents real money you own.

How often should I calculate my net worth?

Once a month is ideal - it takes under ten minutes once you know where to find your balances. Some people prefer quarterly. The key is consistency so you can see whether you’re trending up or down over time.

Does my student loan count as a liability for net worth?

Yes. Your outstanding student loan balance - whether it’s a federal loan through the NSLSC, a provincial loan, or a bank student line of credit - is a liability that reduces your net worth. This is why paying it down increases your net worth even when your savings don’t grow.

Finnav is a personal finance learning app for Canadian students and new grads. Practice real money skills through daily missions, a financial simulator, and bite-sized lessons built around Canadian accounts and rules. Download on the App Store