Calculate Your Net Worth; Compare Against Canadian Average Net Worth Values.
Calculating your household net worth is a valuable exercise when planning your financial future. Our Canada net worth calculator does the math for you. Once complete, you can compare your household net worth with Canadian averages.
How Does Your Net Worth Compare?
According to Statistics Canada, the average Canadian household had a net worth of $967,202 in 2023. Net worth can also be compared in quintiles that group the population into five sets:
- The highest 20% has a net worth of $3,277,423
- The second-highest quintile has a net worth of $982,179
- The next 20% of households has a net worth of $446,721
- The remaining two quintiles have a net worth of $64,844
Why is it Important to Know Your Net Worth?
Why does CNBC say “You Should Know Your Net Worth ASAP”? Because it’s a vital part of your financial future. Knowing your net worth is important for several reasons:
- Financial Health: Your net worth provides a snapshot of your financial standing at a point in time, considering all your assets and debts. It helps you understand whether you are on track to meet your financial goals and if you need to make changes to your spending habits or investment strategy.
- Setting Realistic Financial Goals: It helps in setting realistic financial goals, such as saving for retirement, buying a home, or paying off debts.
- Motivation to Save and Invest: Your net worth can motivate you to save and invest money. If it shows that you are on track to meet your financial goals, it can encourage you to continue what you’re doing. Conversely, if it indicates room for improvement, it can provide motivation to take a more aggressive approach to saving and investing.
- Financial Planning: It aids in creating a financial plan that aligns with your goals. When you’re aware of your net worth, you can make better-informed investment decisions and understand how much capital you have at your disposal.
Understanding Financial Stability: Tracking your net worth over time is a helpful indicator of your financial stability. It provides a big-picture way to measure your overall financial health and helps you understand where you are on your financial journey.
Common Mistakes People Make When Calculating Their Net Worth
Some common mistakes people make when calculating their net worth include:
- Forgetting to Consider Taxation: Failing to consider the impact of taxes on assets and liabilities can lead to a misrepresentation of true financial status. For example, your RRSP investments are taxable upon withdrawal, whereas non-registered and TFSA savings are not. So these values are not truly equal when taxation is taken into account. We considered adding a tax rate field to our Canada net worth calculator, but decided not to. Why? In no realistic scenario would your RRSP assets all be withdrawn at once – it’s much more likely they would be withdrawn over several years. Meantime, those assets are presumably growing in value due to your underlying investments.
- Ignoring the impacts of Inflation in Canada: We’ve compiled extensive data and analysis on the impacts of rising inflation in Canada, exploring vital financial topics such as spending, housing, insurance, investment strategies, retirement, debt reduction and more. The final value of your net worth shown in our Canada net worth calculator is simply a current snapshot. Your fortune will lose spending power unless you increase your assets at a level equal to or higher than inflation. Our Canada inflation calculator tracks inflation over time, and our wage/salary vs inflation calculator lets you compare your earnings growth with Canada’s inflation rates.
- Not Including All Assets: Failing to include all assets, such as illiquid or intangible assets, can lead to an inaccurate representation of net worth. We added the Other Assets field to our Canada Net Worth Calculator so you can capture any assets we didn’t provide room for.
- Ignoring Liabilities: Not accounting for liabilities, such as mortgages, loans, and credit card debts, can result in an incomplete calculation of net worth.
Underestimating the Value of Assets: Failing to thoroughly evaluate the value of assets and excluding certain assets can lead to an underestimated net worth. This is most likely to happen with real estate. You can scan your area’s MLS listings for comparable sale values.
I’ve Calculated My Net Worth. What’s Next?
Congrats! Knowing your net worth puts you in a great position to set goals to further accumulate assets (unless you’re rich and ready to retire – in which case, congrats again!). You can set savings goals using our Canada Budget Calculator, which helps you map your money outflows each month and set some goals for the future. And if growing your savings is top of mind, our RRSP investment calculator is a great place to start.
