Net worth is the value of assets less the amount of liabilities at a particular date. Assets are things owned. Liabilities are amounts owed. A calculation needs both sides and a consistent valuation date.
Income and expenses describe movements over a period. Net worth describes balances at a point in time. Adding a year's salary to the bank balance that already contains its unspent portion counts some of the same money twice.
The following household and amounts are fictional. The example explains a worksheet, not an assessment of how much wealth any reader should have.
Build one dated balance sheet
At 30 June, the fictional household has AUD 15,000 in bank accounts, AUD 30,000 in shares, AUD 100,000 in super and a home valued at AUD 600,000. These assets total AUD 745,000.
The household also has a mortgage balance of AUD 350,000, a car loan of AUD 8,000 and a credit card amount owing of AUD 2,000. These liabilities total AUD 360,000.
Subtracting AUD 360,000 from AUD 745,000 gives net worth of AUD 385,000. That total uses the home value and the mortgage as separate entries.
Another valid presentation shows home equity of AUD 250,000 instead of a AUD 600,000 home asset and AUD 350,000 mortgage liability. Either presentation gives the same answer. Including AUD 250,000 of equity and also subtracting the mortgage would count the debt twice.
Separate market value from original cost
A share portfolio purchased for AUD 25,000 and now valued at AUD 30,000 appears at AUD 30,000 in this particular balance sheet. Adding the original AUD 25,000 purchase amount to it would count one holding twice.
The same distinction applies to sale proceeds. After shares have been sold, the account can hold the cash proceeds instead of those shares. A worksheet containing both the sold holding and its cash proceeds overstates assets.
Property and other non-cash assets introduce valuation uncertainty. A quoted estimate, a recent appraisal and an eventual sale amount can differ. The record needs the date and basis of the value used.
A balance sheet also does not explain how quickly an asset can become spendable cash. Super and a transaction account can appear in the same total but have different access conditions.
Transfers do not create extra wealth
Imagine AUD 5,000 moves from one household bank account to another. The first account falls by AUD 5,000 and the second rises by AUD 5,000. Total bank assets do not change.
A transfer into a share account can likewise move value between asset categories. Counting the transfer as a new asset as well as counting the receiving balance inflates the result.
A loan drawdown illustrates both sides of the sheet. If a fictional AUD 10,000 loan arrives in a bank account, cash rises by AUD 10,000 and liabilities rise by AUD 10,000. Before fees or other changes, net worth is unchanged.
These examples show why an increase in one account balance is not automatically an increase in household net worth.
Currency and timing need labels
A USD account cannot be added to an AUD account as though both dollar symbols represented the same unit. A combined AUD total needs an exchange rate and a valuation date for the conversion.
The same date also matters for debts. Using today's asset balances with a mortgage balance from last year mixes periods. A changing total can reflect updated records rather than a new transaction.
FinTarget's Analytics documentation describes a narrower tracked figure based on portfolios, super and recorded income less expenses. The app has no complete liabilities register. A full household assets-and-debts worksheet therefore remains separate from that chart.
For the fictional household, AUD 385,000 belongs to the dated worksheet with its stated assets, debts and valuation assumptions. An app figure covering fewer accounts measures a different set of records.