If you've ever wondered whether you're actually making progress financially, your net worth is one of the best places to look.
Many people focus on income, revenue or the balance in their bank account. While those numbers matter, they only tell part of the story. Your net worth shows the bigger picture by measuring everything you own against everything you owe.
For small business owners, this can be eye-opening. It's easy to get caught up in sales, growth and day-to-day operations while overlooking your personal financial position. But building a successful business and building personal wealth aren't always the same thing.
Knowing your net worth gives you a clear starting point. It helps you understand where you stand today, identify opportunities for improvement and measure progress toward your long-term financial goals.
What is net worth?
Net worth is the difference between your assets and your liabilities.
Assets are things you own that have financial value. Liabilities are debts and obligations you owe.
Net worth = Assets - Liabilities
For example, let's say you own:
- $25,000 in savings and investments
- A home with $400,000 in equity
- A vehicle worth $15,000
Your total assets equal $440,000.
If you owe:
- $250,000 on your mortgage
- $10,000 on a vehicle loan
- $5,000 on a credit card
Your total liabilities equal $265,000.
Your net worth would be $175,000.
Whether your number is positive or negative, don't get too caught up in the result. The goal is understanding where you're starting from so you can make informed decisions moving forward.
How to calculate your net worth
Step 1: List your assets
Start by making a list of everything you own that has monetary value.
Common assets include:
- Cash and savings accounts
- RRSPs, TFSAs and RESPs
- Stocks, bonds and other investments
- Real estate
- Business ownership
- Vehicles and equipment
- Valuable collections, artwork or jewelry
When assigning values, use realistic market values rather than what you originally paid.
Ask yourself:If I needed to sell this today, what could I reasonably get for it?
Step 2: List your liabilities
Next, make a list of everything you owe, including balances and interest rates.
Common liabilities include:
- Mortgages
- Credit card balances
- Student loans
- Vehicle financing
- Lines of credit
- CRA debt
- Outstanding bills and payment plans
Step 3: Subtract liabilities from assets
Add up your assets. Add up your liabilities.
Subtract your liabilities from your assets.
That's your net worth.
A net worth calculator
If you want to make the process easier, try these great net worth calculators to help you find your number: Get Smarter About Money and Nerd Wallet.
How often should you calculate your net worth?
For most people, checking your net worth once or twice a year is enough. Your financial position usually won’t change dramatically month to month, but reviewing it regularly can help you track progress and stay focused on your goals.
You may also want to revisit your net worth after major life or business changes, such as:
- Buying or selling property
- Starting or growing a business
- Paying off significant debt
- Making large investments
Why your net worth matters
Knowing your net worth helps you understand your overall financial health. It gives you clarity on where your money is going and helps you identify what needs attention.
For example:
- High debt may signal it’s time to focus on repayment
- Low savings may mean it’s time to revisit your budget
- Growing investments may show your long-term plan is working
Your net worth is not a measure of your personal value. It’s a financial tool that helps you make informed decisions and measure progress over time.
How to improve your net worth
Once you know your number, the next step is improving it. That means increasing your assets, reducing your liabilities and making intentional financial decisions consistently over time.
1. Build a realistic budget
A budget helps you understand where your money is going and where you may be overspending. The goal isn’t to restrict yourself — it’s to create a plan that supports your financial goals.
Start by reviewing:
- Fixed monthly expenses
- Variable spending
- Savings contributions
- Debt payments
Even small adjustments can free up cash to put toward debt repayment or investing.
2. Cut unnecessary recurring expenses
Small monthly expenses add up quickly.
Review your recurring payments and cancel anything you no longer use or value. This could include:
- Streaming subscriptions
- Unused memberships
- Subscription boxes
- Frequent food delivery
Reducing recurring expenses can improve cash flow immediately.
3. Pay down high-interest debt
Debt can make it difficult to build wealth, especially when high-interest charges are working against you.
Start by listing all debts along with their balances and interest rates. Then choose a repayment strategy that works for you:
- Pay off high-interest debt first
- Pay off the smallest balances first for quick wins
- Focus on debts affecting your credit most
Credit cards, unpaid tax balances and overdue bills can become expensive quickly, so it’s important to address them early.
If your debt feels overwhelming, getting professional guidance sooner rather than later can help you avoid bigger financial problems down the road.
Money Mentors is a not-for-profit organization providing credit counselling, education and debt consolidation. Read our blog about small business debt if you’re worried about being in too deep.
And if bankruptcy has crossed your mind, see our blog on how to deal with bankruptcy. It was inspired by the journey of a good friend (and client).
4. Start investing consistently
Building net worth isn’t just about reducing debt — it’s also about growing your assets.
Consistent investing over time can help you build long-term financial stability through compound growth. Even small monthly contributions can make a meaningful difference over the years.
This may include:
- RRSP contributions
- TFSA investing
- Diversified investment portfolios
- Business investments with long-term value
The key is consistency and having an investment plan that aligns with your goals and risk tolerance.
5. Diversify your assets
Many small business owners have a large portion of their net worth tied to their business. While that can be valuable, diversification is important.
Building personal investments outside your business can help create more long-term financial security and flexibility.
6. Avoid taking on new debt
One of the fastest ways to slow down financial progress is adding new monthly payments unnecessarily.
Before taking on new debt, ask yourself:
- Is this purchase necessary?
- Can I afford to pay for it upfront?
- Will this improve my long-term financial position?
Financing furniture, electronics, vehicles and lifestyle purchases may seem manageable in the short term, but ongoing payments can limit your ability to save and invest.
The same goes for large home renovations or refinancing debt without a clear financial plan.
A note about homes, vehicles and assets
Many people assume their home or vehicle is automatically an asset. While these can increase in value over time, they also come with ongoing costs like loan payments, insurance, maintenance, taxes and utilities.
The important thing is understanding how these purchases affect your overall financial picture and cash flow.
For example, a rental property with positive cash flow may strengthen your net worth, while one that consistently loses money may create financial strain.
Focus on your financial goals (not someone else’s)
Personal finance is personal for a reason. Everyone has different income levels, responsibilities, goals and timelines.
Comparing yourself to others rarely tells the full story.
What matters most is understanding your own financial position and making steady progress toward the future you want.
Improving your net worth doesn’t happen overnight. It’s built through consistent habits, thoughtful planning and smart financial decisions over time.
At True North Accounting, we help small business owners understand their numbers, build financial clarity and create plans for long-term growth. If you’re ready to take control of your finances, book a meeting with our team to get started.
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