How to use the net worth projection calculator
- Enter your assets today and your debts today. Assets are everything you own at today's value, such as savings, investments and property. Debts are what you owe.
- Enter how much you add to your assets each year, the yearly growth you want to assume for them, and the interest rate on your debts. Then enter the total you pay toward debts each year and how many years to project.
- Choose whether savings go in at the end or the start of each year. Open Advanced options if your yearly savings will rise by a set percent.
- Read the projected net worth at the top, then the year by year table. Use Copy, Print or CSV to keep it.
Formula
Assets (savings at year end) = last year assets x (1 + growth) + savings
Assets (savings at year start) = (last year assets + savings) x (1 + growth)
Debts = last year debts x (1 + interest rate) - payment, never below 0
Net worth = assets - debts
Each year builds on the one before, so the result depends on the order of growth and savings. Savings can rise by a set percent each year, which multiplies the saved amount by (1 + rise) once per year after the first.
Ten years from 50,000 in assets and 20,000 in debts
Start with $50,000 in assets and $20,000 in debts. Add $5,000 at the end of each year, assume 5% yearly growth, charge 6% on the debts and pay $4,000 toward them every year. After year 1 the assets are 50,000 x 1.05 + 5,000 = $57,500 and the debts are 20,000 x 1.06 - 4,000 = $17,200, so net worth is $40,300.
The debts reach zero in year 7, because the balance left after year 6 is less than one payment. After 10 years the assets are $144,334.19, the debts are $0 and net worth is $144,334.19, up from $30,000 today. Of the $114,334.19 gain, $20,000 comes from paying off the debts, $50,000 is money you added and $44,334.19 is growth on the assets. The debt payments are treated as coming from your income, not from the assets.
What net worth tells you and what it leaves out
Net worth is the value of what you own minus what you owe. It is a snapshot of your position, and watching how it changes is often more useful than any single number. A projection turns your assumptions into a path, so you can see how much each one matters. Try changing the growth rate by a point or two, or the yearly savings, to see which lever moves the result most.
Net worth does not say how easily you could spend it. A home counts as an asset but is hard to sell in pieces, and money in a retirement account may be hard to reach early. For today's figure, use the net worth calculator. To see how a single balance grows with regular deposits, try the compound interest calculator or the savings calculator.
Choosing growth rates
The growth rate you enter is a planning assumption, not a prediction. Real investments rise and fall from year to year, and a smooth 5% every year is a simplification. Cash, bonds, stocks and property grow differently, so some people run the projection several times with a low, middle and high rate to see a range.
The calculation does not subtract taxes, fees or inflation. To see today's buying power, lower the growth rate by your expected inflation rate, which gives a rough figure in today's money. Debts are modeled with one interest rate and one fixed yearly payment, so a mix of loans is best entered as an average.
Assumptions and limits
- Growth and interest are applied once a year, and amounts are rounded to the cent only for display.
- The yearly debt payment is paid from your income. It is not subtracted from your assets, and any payment left after the debts reach zero is not added to assets.
- Savings are added at the end or the start of each year as you choose, and may rise by a set percent each year.
- Taxes, fees, inflation, new borrowing and one time events such as an inheritance or a house purchase are not modeled.
- The growth rate and the other example values are starting points you can edit. They are not forecasts or averages.
Frequently asked questions
How is projected net worth calculated?
Each year the assets grow by your rate and the savings are added, while the debts grow by their interest and shrink by your payment. Net worth is the assets minus the debts at the end of each year.
Why does my net worth start negative and then turn positive?
If your debts are larger than your assets today, net worth begins below zero. Savings and growth on the assets can then outrun the debt, and the tool shows the year when net worth first reaches zero or more.
Should savings be added at the start or end of the year?
Start of year gives the money a full year of growth, so the result is higher. End of year is the cautious choice when you save a little each month, because money saved late in the year has little time to grow.
Can I include a house and a mortgage?
Yes. Count the home value among your assets and the mortgage balance among your debts, then enter a growth rate for the whole pile and a yearly mortgage payment. For a precise mortgage schedule, use a dedicated loan calculator.