What Is Net Worth?
Simple formula: Net Worth = Assets − Liabilities
Example: You have $50,000 in savings, own a car worth $15,000, and owe $20,000 on a car loan.
Net worth = ($50,000 + $15,000) − $20,000 = $45,000
Why Net Worth Matters More Than Income
Two People, Same Income
Person A: Earns $60,000/year. Spends $65,000/year. Has saved nothing.
Person B: Earns $60,000/year. Spends $40,000/year. Has saved $100,000.
Same income. Completely different destinies.
Person A is one emergency away from crisis. Person B has a financial cushion and is building wealth.
Income is what you make. Net worth is what you've kept.
How to Calculate Your Net Worth
Step 1: List All Assets
Assets are things you own that have value:
- Savings account: $5,000
- Checking account: $2,500
- Roth IRA: $35,000
- 401(k): $50,000
- Taxable brokerage: $25,000
- Car (current value): $12,000
- Home (current value): $400,000
Total assets: $529,500
Step 2: List All Liabilities
Liabilities are debts you owe:
- Car loan: $8,000
- Student loans: $15,000
- Credit card debt: $2,500
- Mortgage: $300,000
Total liabilities: $325,500
Step 3: Calculate
Net Worth = $529,500 − $325,500 = $204,000
Age Benchmarks for 2026
Here's where the median ITIN holder should aim, by age:
| Age Range | Median Net Worth |
|---|---|
| Under 35 | $39,000 |
| 35–44 | $135,000 |
| 45–54 | $247,000 |
| 55–64 | $364,000 |
| 65–74 | $410,000 |
What These Numbers Mean
These are medians, not averages. A few ultra-wealthy households skew the average upward. The median is more realistic.
If you're 40 with $150,000 net worth, you're slightly above median — doing well.
If you're 40 with $50,000 net worth, you're behind — but not catastrophically. You still have 25 years to compound.
The Compounding Power of Tracking
Why track annually? Because it makes compounding visible.
Year 1: Net worth goes from $50,000 to $58,000 (+$8,000). Effort: budget, invest, save.
Year 5: Net worth is $100,000. You didn't add $50,000 yourself — compound growth on your investments did half the work.
Year 15: Net worth is $400,000. Now compound growth is doing most of the heavy lifting.
Tracking shows you that time + discipline = wealth. That's powerful motivation.
When to Track
Once per year: Pick an anniversary date (birthday, New Year, any date). Calculate your net worth. Write it down. Compare to last year.
That's it. Annual tracking is enough. Monthly tracking creates noise and encourages panic during market downturns.
The Real Wealth Metric
A $60,000/year income with 10 years of consistent savings could yield $300,000+ net worth.
A $150,000/year income with spending equal to income yields $0 net worth.
Net worth is the truth about your financial decisions. It's what you've earned minus what you've spent, compounded over time.
Frequently Asked Questions
What is net worth and how do I calculate it?
Net worth is everything you own (cash, investments, home, car) minus everything you owe (loans, credit cards). Total your assets, subtract your debts, and track that number over time.
Why does net worth matter more than income?
A high income does not build wealth if it is all spent. Net worth measures what you actually keep, and it grows through saving, investing, and paying down debt — it is the truer scoreboard.
How often should I track it?
Monthly or quarterly is plenty. The point is the trend, not the daily number — watching it rise reinforces the habits that move it.
Can ITIN holders build and track net worth?
Yes. ITIN holders can own bank, brokerage, and retirement accounts and a home — all of which count toward net worth and are tracked the same way as for anyone else.