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How to Calculate Your Tangible Net Worth

Key Takeaways

  • Your tangible net worth is the sum total of your tangible assets (those that can be physically held or converted to cash) minus your liabilities minus your intangible assets.
  • When calculating your tangible net worth, “assets” are everything that you own that can be converted to cash.
  • Here’s the formula for calculating your tangible net worth: Total Assets – Total Liabilities – Intangible Assets = Tangible Net Worth


Calculating your net worth is a relatively straightforward process. Add up your assets and subtract your liabilities; the resulting number is your net worth. If your assets exceed your debts, congratulations, you are in the black. Many people are unpleasantly surprised to learn their net worth is a negative number. This can happen if you, for example, bought your home just before a market decline, have heavy credit card debt, or you spend all or most of what you make.

For some people, the straightforward calculation may not be enough. If you own patents, copyrights, or other intellectual property, you may need to calculate your tangible net worth. This is the total of all your tangible assets minus your liabilities.

What Is Tangible Net Worth?

Your tangible net worth is your assets minus your liabilities, but it goes one step further by subtracting the value of any intangible assets.

This number is important to individuals who are applying for personal or small business loans, where the lender demands a “real” net worth figure.

Your lender may be interested in your tangible net worth because it provides a more accurate view of your finances—and how much the lender could recoup if it had to liquidate your assets if you defaulted on the loan.

What Are Assets and Liabilities?

Assets: Assets include cash and investments — such as in your checking, savings and retirement accounts — and items such as cars or property that you could sell for cash. Cash and investments are often referred to as liquid assets.

Liabilities: Any money you owe to another person or entity falls under this category. That includes revolving consumer debts — such as credit card balances — as well as personal, auto, payday and title loan balances. If you’re using your home as an asset, your mortgage counts as a liability.

What Are Tangible Versus Intangible Assets?

The difference between net worth and tangible net worth calculations is that the former includes all assets and the latter subtracts the assets that you cannot physically touch.

Assets are everything that you own that can be converted into cash. By this definition, types of tangible assets include cash, investments, real property (land and permanent structures, such as homes and structures attached to the property), and personal property (everything else that you own such as cars, boats, furniture, and jewelry). These are your tangible assets; they are all things with physical form.

(Strictly speaking, investments are financial assets, not tangible ones. But because they can be converted to cash, they’re often put in the tangible category for purposes like this.)

Intangible assets, on the other hand, are assets you cannot touch or easily sell. Goodwill, copyrights, patents, trademarks, and intellectual property are all considered intangible assets since they cannot be seen or touched even though they are valuable. If you are selling your small business, you may be able to rightly argue that these intangible assets add value to the business. However, in the case of determining tangible net worth as part of the loan process, the bank may only consider those assets that are tangible because they could be more easily liquidated.

How To Calculate Your Tangible Net Worth

Your tangible net worth is your total assets minus your liabilities minus your intangible assets. To calculate your tangible net worth, you must first determine your total assets, total liabilities, and the value of any intangible assets.

The first time you calculate your tangible net worth will probably take the longest.

Before you start, decide if you want to calculate your tangible net worth individually (you) or jointly (you and your spouse/partner).

Here’s a step-by-step approach.

Calculating Assets

Begin with the most liquid assets, the amount you have in cash and cash equivalents, and include:

  • Certificates of deposit
  • Checking and savings accounts
  • Money market accounts
  • Physical cash
  • Treasury bills

Next, move on to investments, determining their current market value.

These include:

  • Annuities
  • Bonds
  • Life insurance cash value
  • Mutual funds
  • Pensions
  • Retirement plans
  • Stocks
  • Other investments

Personal property is everything else and can include:

  • Collectibles
  • Household furnishings
  • Technology
  • Jewelry
  • Primary residence
  • Rental properties
  • Vehicles

Add them all up and the sum represents your total assets.

Calculating Liabilities

Your liabilities represent all of your outstanding debts. You will probably get statements from your lenders that you can use.

Start off with the amount you owe in secured debts, including:

  • Home equity loan
  • Margin loans
  • Mortgage
  • Rental real estate mortgage
  • Second mortgage
  • Car loan(s)

Then move on to the amount you owe in unsecured debts:

  • Credit card debt
  • Medical bills
  • Personal loans
  • Student loans
  • Taxes due
  • Other debt and outstanding bills

Add your secured debts and unsecured debts together. The sum represents your total liabilities.

Calculating Your Intangible Assets

Your intangible assets are all of your assets that cannot be touched or converted into cash:

  • Goodwill
  • Copyrights
  • Patents,
  • Trademarks
  • Intellectual property

Add these together. The sum is your intangible assets.

Calculating Your Intangible Net Worth

Here’s the formula for calculating your tangible net worth:

Total Assets – Total Liabilities – Intangible Assets = Tangible Net Worth

Want to see how you stack up? Check out the average net worth by age and the average net worth by state.

Our Take on Net Worth

Be conservative with estimates, especially with home and vehicle values. Inflating the value of large assets may look good on paper, but may not paint an accurate picture of your net worth. Consider using our financial tools to track your net worth automatically.

Keep liquid savings in high-yield accounts, which can help them grow faster if you’re earning a competitive annual percentage yield. Make debt repayment a priority and consider consolidating debt at a lower interest rate to help speed up your debt payoff.

Review your budget to look for areas where you can reduce expenses and allocate more money to either savings or debt repayment. If you have additional money to save, consider maxing out your emergency fund, then maxing out your annual contributions to an individual retirement account.

The Bottom Line

Knowing your net worth is an important part of managing your personal finances. You can take a couple of actions now to get yourself on the right track.

  1. Sign up for the Personal Capital Dashboard. You can use these free financial tools to see all of your accounts in one place, track your net worth over time, and plan for long-term financial goals.
  2. Consider talking to a fiduciary financial advisor for more detailed guidance on your growing your net worth.

Get Started with Personal Capital

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

JJ Lester, CFP® is a financial advisor at Personal Capital. Prior to his work at Personal Capital, JJ served both as an estate specialist at Oppenheimer Funds and financial advisor through LPL Financial. JJ holds an M.S. in Management from The American College of Financial Services and a B.A. in Psychology from the University of Colorado, Boulder.
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