How to Calculate and Grow Your Net Worth for Financial Freedom

Most people know the balance in their bank accounts, but very few truly understand their net worth — the real measure of financial health. Whether you’re earning a modest salary or running multiple hustles, knowing your net worth helps you take full control of your finances and make smarter money decisions.

What Is Net Worth?

Your net worth is the total value of everything you own minus everything you owe. In simple terms, if you sold all your assets today and used the money to clear your debts, the amount left would be your net worth.

For example, if you have ₦4 million in savings, a car worth ₦3 million, and investments worth ₦2 million, your assets total ₦9 million. If you owe ₦3 million in loans, your net worth equals ₦9 million minus ₦3 million — that’s ₦6 million.

It’s important to note that earning a high salary doesn’t automatically mean you have a high net worth. Someone earning ₦400k monthly but with no debt and valuable assets can be financially healthier than someone earning ₦800k but drowning in loans.

How to Calculate Your Net Worth

You don’t need a finance degree to calculate your net worth. All it takes is honesty, a simple list, and a calculator.

Step 1: List Your Assets

These are the valuable items you own, such as:

• Cash in your bank accounts or digital wallets (Kuda, PalmPay, OPay, etc.)
• Investments like real estate, stocks, mutual funds, or cryptocurrency
• Valuables including cars, land, gold jewelry, or electronic gadgets with resale value

Step 2: List Your Liabilities

These include everything you owe, such as:

• Loans from banks, cooperative societies, or loan apps
• Unpaid rent, utility bills, or school fees
• “Buy Now, Pay Later” debts or salary advances

Step 3: Subtract Liabilities from Assets

Once you total both sides, subtract your liabilities from your assets. The result is your net worth.
For example, if your total assets equal ₦10 million and your debts equal ₦4 million, your net worth is ₦6 million.

You can use a simple spreadsheet or note it down in a book and review it every few months as a financial check-up.

Why Knowing Your Net Worth Matters

Your net worth acts as a financial compass, showing whether you’re moving forward, backward, or standing still. It helps you see your true financial position beyond just your account balance.

Here’s why it’s important:

• It helps you set achievable financial goals.
• It keeps you accountable for your spending and debts.
• It guides your investment and saving decisions.
• It helps you know when to take risks or when to cut back.

How to Grow Your Net Worth

Building wealth in Nigeria isn’t always easy, especially with rising prices and unpredictable expenses. Still, improving your net worth is possible with consistent effort.

1. Save Regularly

Even saving ₦10,000 monthly makes a difference. Use automated savings platforms like PiggyVest, Cowrywise, or Bamboo to make saving easier and more consistent.

2. Pay Off Debt

Clear high-interest loans first and avoid borrowing for non-essential items. Reducing debt directly increases your net worth.

3. Invest Wisely

Put your money in low-risk investments such as mutual funds, real estate, or treasury bills. Use reliable apps like Risevest, Ladda, or Bamboo to manage your investments safely.

4. Create Multiple Income Streams

Don’t depend solely on your salary. Start a side hustle, freelance online, or invest in a small business. Extra income accelerates your financial growth faster than cutting expenses.

Common Mistakes That Affect Net Worth

Many people unknowingly reduce their net worth by making these common mistakes:

• Counting depreciating items like phones or shoes as assets.
• Ignoring small debts or unpaid bills.
• Comparing their finances to others on social media.
• Failing to track their financial progress over time.

When Your Net Worth Is Negative

Having a negative net worth isn’t the end of the road. Many young Nigerians start there due to student loans, unpaid bills, or other financial obligations. What matters is your plan to improve it.

Start by listing all your debts and their interest rates. Pay off smaller ones first to build motivation, then move to larger ones. Keep saving, even in small amounts, while reducing expenses and avoiding new debts.

Your net worth reveals your true financial story — where your money has been, where it is, and where it’s going. Knowing it allows you to plan better, invest wisely, and build long-term wealth.

When you take control of your net worth, you’re not just counting money — you’re shaping your financial future.