What actually counts in your net worth (your house, your car, your 401k)
Net worth is one subtraction. Everything you own, minus everything you owe. That is the entire formula, which means almost everything counts: the checking account, the 401k, the house, the car in the driveway, the $412 sitting on a credit card.
So why does every answer you find contradict the last one? Because people skip the arithmetic and argue about the thing underneath it. "Does the house count?" is rarely a question about accounting. It is a question about whether you get to feel richer because of a place you have no intention of selling.
That is the reframe worth having. The line items are settled. What the number is for is not. A net worth statement built to answer "how close am I to being done working?" emphasizes different things than one built to answer "did I make progress this year?" Same formula either way. Go item by item and most of the internet's disagreements turn out to be about purpose, not math.
Does net worth include your 401k and IRAs?
Yes. A 401k, a Roth IRA, a traditional IRA, an old 403(b) you forgot to roll over: those balances are yours, and they are assets. Leaving them off gives you a number that is wrong by a large fraction and gets more wrong every year you contribute.
Here is the wrinkle people are actually asking about. A traditional, pre-tax 401k has never been taxed. When you eventually take money out, it is taxed as income. So the balance on the statement is not the amount you could spend. A Roth balance, already taxed on the way in, is closer to a spendable number.
Some people handle this by writing down the pre-tax accounts, applying whatever rate they expect to pay later, and carrying the smaller figure. Others carry the full balance and just keep the caveat in their head. Both are defensible. What matters is that you pick one and stay consistent, because a net worth history is only useful if this year and last year were measured the same way. If you do discount, write down what rate you used. Future you will not remember.
One thing to be clear about: this is a choice about how you keep your own statement, not a rule handed down from somewhere. Nobody audits your spreadsheet.
Does net worth include your house, or just your home equity?
Both, and they are the same answer written two different ways.
The clean version uses two lines. The house goes under assets at roughly what it would sell for today. The mortgage goes under liabilities at the balance you still owe. Subtract, and the net effect is your home equity. You could also skip straight to one line that says "home equity" and land on an identical bottom number.
Two lines is more informative. It shows you a $600,000 house against a $430,000 mortgage instead of a single number that hides both. When rates move, when you refinance, when you make an extra payment, you can see which side of the pair moved. And "what would this sell for" is a real estimate you can revisit once a year rather than a figure you carry forward forever from the day you bought.
Now the honest part. You cannot spend a bedroom. Home equity is real wealth and it is also the least reachable wealth you own, because getting at it means selling the place you live, borrowing against it, or dying. That is not an argument for excluding it. It is an argument for not letting it be the only number you look at, which is what the second half of this article is about.
Should you count your car?
Technically yes, at what you could sell it for today. Not what you paid, not what you still owe on it, not what the dealer's trade-in offer was in 2022. The free pricing guides will get you close enough for a personal statement, and close enough is the standard here.
The reason cars start arguments is that they move the wrong direction. A car loses value over time, quietly, whether or not you update the line. If you enter the purchase price once and never touch it again, your net worth chart inherits a slow lie that only grows.
So counting the car is fine. Treating it as a win is not. A $38,000 truck on the asset side is a $38,000 asset that will be worth meaningfully less next year, and if it is financed there is a loan sitting on the other side of the ledger doing its own thing. Plenty of people leave the car off entirely just to keep the number honest and the maintenance low. That is also fine, as long as the loan stays on. Dropping the asset and keeping the debt is conservative. Dropping the debt and keeping the asset is how you fool yourself.
Do you subtract your mortgage, credit cards, and student loans?
All of them. Every dollar you owe, to anyone, is the entire second half of the formula. The mortgage. The card you pay off in full each month, which still counts on the day you take the snapshot. The student loans. The car loan. The medical bill on a payment plan. The furniture thing with the promotional financing.
Use the balance today, not the original loan amount and not the total you will have paid once interest is done. A liability is what it would cost to clear the debt right now.
This is the half people quietly skip, usually not on purpose. It is easy to remember four accounts that hold money and forget three that hold debt, because nobody sends you a cheerful monthly email about your balances going up. Pulling every account into one place, cash and cards and loans and property side by side, is most of what a tracker like Pocketwatch is doing for you. The math is not hard. The remembering is.
And if the subtraction comes out negative, that is a normal place to start. A recent graduate with loans and no house is supposed to be underwater on paper. The number is a snapshot, not a verdict.
Is a pension or Social Security part of your net worth?
These are the two that genuinely do not fit, and it is not because they are worthless.
A defined-benefit pension pays you income later. It does not hold a balance you own the way an IRA does. There is nothing to liquidate, nothing to leave in a will in most cases, no line that can be marked to market on a Tuesday. Social Security has the same shape: a future income stream, not a pile of assets with your name on it.
Because of that, net worth statements usually leave both off, or list them separately in a note underneath. The note is the useful move. "Net worth: $310,000. Plus a pension estimated at $2,100 a month starting at 65." You keep the information without contaminating the arithmetic.
There is a practical reason to keep them out of the main number. The moment you convert a future income stream into a lump sum and add it in, your net worth stops being comparable to anyone else's, including your own from three years ago when you used a different assumption.
The two-number habit that ends most of these arguments
Keep two numbers instead of one.
Total net worth is the full subtraction, house and car included. It answers "what am I worth on paper?"
Liquid or investable net worth excludes the things you cannot readily sell, which in practice means home equity and usually the car. It answers a completely different question: "what have I actually built that I could deploy?"
Almost every fight about whether the house counts is really two people answering two different questions with one number. The homeowner whose net worth is 80% equity and the renter with the same total in index funds are in genuinely different positions, and no single figure describes both of them well. Two figures do.
The second number is also the one that tends to move for reasons you controlled. Your house appreciating is the market being the market. Your investable number climbing is contributions, paydown, and time.
Pocketwatch tracks cash, credit cards, loans, property, and investment accounts with live market prices, computes your net worth over time, and lets you set goals against it, so you can watch the whole picture and the liquid slice of it without maintaining two spreadsheets that disagree by March.
Common questions
Does net worth include your 401k?
Yes. Retirement accounts are assets and belong in the total. If the account is pre-tax, remember the balance will be taxed as income when it comes out, so some people carry a discounted figure instead. Either approach works. Consistency across years is what actually matters.
Does net worth include your house or just your home equity?
Either, because they produce the same answer. List the house at market value as an asset and the mortgage as a liability, or list home equity as a single line. The two-line version tells you more about what is moving.
Should you count your car?
You can, at what it would sell for today rather than what you paid. It depreciates, so the line needs updating occasionally or it drifts. Leaving the car out is a reasonable simplification, but the car loan stays on the liability side regardless.
Do you subtract your mortgage?
Yes. The remaining balance is a liability, period. Subtract every debt you carry, at today's payoff amount rather than the original loan or the total with interest.
Is a pension part of your net worth?
Usually not, because a defined-benefit pension pays future income rather than holding a balance you own. Most people leave it off the statement and note the expected monthly benefit separately. Social Security gets the same treatment.