Last Updated on April 14, 2026 by Hemant Beniwal
Here is a question I ask every new client in our first meeting.
“What is your net worth?”
Most people pause. Some give me their salary. Some mention their portfolio value. A few guess at a number. Very rarely does someone come in with the actual figure calculated correctly.
Net worth is the most important number in personal finance. And most Indians have never calculated it.
⚡ Quick Answer
Net worth = Total Assets minus Total Liabilities. Assets include everything you own that has monetary value — investments, property, EPF, gold, cash. Liabilities include everything you owe — home loan, car loan, personal loans, credit card outstanding. A positive and growing net worth means you are building wealth. A stagnant or declining net worth means something is wrong, regardless of how high your salary is.
Why Net Worth Matters More Than Income
A senior executive earning Rs 40 lakh per year with Rs 80 lakh in loans and Rs 30 lakh in assets has a negative net worth. A schoolteacher earning Rs 8 lakh per year with a paid-off house, Rs 25 lakh in mutual funds, and no debt has a net worth of Rs 80+ lakh.
Who is wealthier? The answer is obvious — and it has nothing to do with income.
Income is a flow. Net worth is a stock. Income tells you how much water is flowing into your bucket. Net worth tells you how much water is actually in the bucket. You can have a strong flow and a leaking bucket. Net worth shows you the leak.
How to Calculate Your Net Worth
Step 1: List all your assets.
Financial assets: bank account balances, fixed deposits, mutual fund portfolio (current value), stocks (current market value), PPF balance, EPF balance, NPS balance, bonds, NSC, post office savings.
Physical assets: current market value of property you own (not purchase price — current value), gold (current market value of jewellery and coins), vehicles (current resale value, not purchase price).
Business assets: if you own a business, include a conservative estimate of its value.
Add all of these. This is your total assets figure.
Step 2: List all your liabilities.
Loans: outstanding home loan balance, car loan balance, personal loan balance, education loan balance.
Credit: total credit card outstanding (not limit — what you actually owe).
Other: any informal borrowings, business loans, advances taken.
Add all of these. This is your total liabilities figure.
Step 3: Net Worth = Total Assets – Total Liabilities.
Do you know your net worth — and whether it is on track for retirement?
A fee-only advisor calculates your net worth, benchmarks it against your retirement goal, and builds a plan to close the gap.
Common Mistakes in Calculating Net Worth
Using purchase price for property instead of market value. A flat bought for Rs 50 lakh in 2010 may be worth Rs 1.2 crore today — or Rs 45 lakh if the locality has stagnated. Use current market value, not what you paid.
Forgetting EPF and NPS. For a 45-year-old with 20 years of employment, EPF alone can be Rs 40-80 lakh. This is a major asset that many people exclude from their net worth calculation.
Ignoring gold jewellery. The average Indian household holds significant wealth in gold. At current prices, 200 grams of gold is worth approximately Rs 16-18 lakh. Include it at current market value.
Including the full property value when there is a loan. If your flat is worth Rs 1 crore and your outstanding home loan is Rs 60 lakh, your net equity in the property is Rs 40 lakh — not Rs 1 crore. The loan is a liability; deduct it.
What Is a Good Net Worth?
A rough benchmark: by age 40, your net worth should be approximately 3-4 times your annual income. By 50, approximately 6-8 times. By 60 (retirement), approximately 15-20 times annual expenses — which is your retirement corpus target.
These are directional benchmarks, not rigid rules. The right net worth depends on your retirement timeline, lifestyle, and goals. But if you are 45, earning Rs 30 lakh per year, and your net worth is Rs 40 lakh — you have a serious gap to address. Understanding your retirement corpus requirement starts with knowing your current net worth.
Track It Every Year
Calculate your net worth once — then recalculate every 12 months. The trend matters as much as the number.
A rising net worth means you are accumulating faster than you are spending and borrowing. This is the direction you want.
A flat net worth despite a good income means lifestyle inflation is consuming everything you earn — and your financial life is not actually moving forward.
A falling net worth is a serious warning signal that requires immediate attention: either expenses are out of control, debt is growing, or asset values are declining faster than savings are building. Ignoring a falling net worth is one of the most dangerous financial mistakes senior executives make.
Your salary tells you what you earn. Your net worth tells you what you have built. The two numbers are often very different. The gap between them is the story of your financial life.
Calculate your net worth today. Then calculate it again next year. The direction of that number is the most honest measure of your financial progress.
💬 Your Turn
Have you calculated your net worth recently? Was the number higher or lower than you expected? Share what surprised you most.
Thanks for a very useful piece, Hemant. How do you categorise high, medium, low net worth? Who are HNI- s? And should these categories be absolute or should they vary with age, earning potential, future liabilities etc? Would be nice to hear.
Please explain Inheritances
hello mr hemant..
a very useful article again..according to formula u have given, minimum increase in net worth every year should be 10 percent of annual household income..
in case, both me and my wife are earning and our income adds to household, how can we calculate our net worth individually..
dear mr. hemant,
nice to see this post. but i have some doubts on the formula. suppose someone has an annual income of rs. 10 lakhs and is aged 40, then the net worth works out to just rs. 40 lakhs which will hardly give an adequate income to live his retired life. would be thankful for your inputs and clarifications…
thanks
chellamani
This thumb rule is from the book ‘The Millionaire Next Door’ by Stanley & Denko. Though its a good rule to check if you are in the right track, I am skeptical as to whether this formula applies to Indian audience. Anyways, PAW, UAW and AAW are interesting concepts..
To continue with this topic pls suggest a good online portfolio manager which shows our daily net worth of our investments.
I invest only in mutual funds.
Thanks in advance,
Veerendra Darakh
Is any parameter which states the degree of someone’s net worth? How will someone whether their net worth is high, medium or low?
Dear Rishika
To categories high, medium & low net worth you have to calculate your net worth by arithmetically & thumb rule formulas. If net worth (Arithmetically formula) is higher then net worth (Thumb rule) then it will be considered as high category.
Life is pretty dynamic. There are changes that can be foreseen and some are unpredictable. The changes can cause physical, emotional and financial changes. It would be easier to handle all the other changes if your are finances are in order.
Thanks for sharing your views
sir what to do in present fall of market.Our whole mutual fund profit gone.
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