Liquid Net Worth 2023 [What It Is & How To Calculate?]

Updated On: 09/18/2023 is reader-supported. When you buy via links on our site, we may earn an affiliate commission at no cost to you.

You may have come across the terms "net worth" and "liquid net worth" in your quest to get a grip on your personal finances. There might be several questions buzzing in your head. What is liquid net worth? How does it differ from regular net worth? Don't fret; these concepts are not as complex as they might initially seem.

Liquid net worth measures your financial health, just like net worth. However, it considers explicitly those assets you can quickly convert to cash without losing value. Understanding your liquid net worth provides a clearer picture of your financial stability and resilience in emergencies.

So, let's unpack this idea and see how determining your liquid net worth can aid you in making informed financial decisions.

What is liquid net worth?

Liquid net worth is the total value of an individual's assets that can be quickly converted into cash. It includes savings accounts, stocks, bonds, and other marketable securities.

What is liquid net worth?

Some elements like real estate properties, automobiles, or personal belongings aren't counted as liquid assets because they can't be quickly sold for their total market value.

What Are Liquid Assets?

Liquid assets are the core components when calculating your liquid net worth. Any assets you own that can be swiftly converted into cash without losing value. Think of it as anything you could quickly sell or cash in if needed.

Banks consider multiple things as liquid assets, including but not limited to:

  • Cash: This is the most prominent kind of liquid asset. It's already cash, so there's zero conversion time.
  • Checking & Savings Accounts: Any money in these accounts is easily accessible and thus considered a liquid asset.
  • Marketable Securities: Stocks, bonds, and similar investments fall under this category because they can be sold whenever markets are open to provide quick cash.
  • Certificates of Deposit (CDs): Depending on the terms set by your bank, CDs can also be considered a liquid asset.

Not all assets are deemed liquid assets. Cars, houses, and other forms of property usually take time to sell and may lose value upon sale; hence, they aren't seen as "liquid."

Also Read: Negative Net Worth [6 Money Moves To Avoid It In 2023]

How do you calculate liquid net worth?

Calculating your liquid net worth isn't as daunting a task as it may sound. Here are the steps you can follow:

Step One: Tally Up Your Liquid Assets

Liquid assets are things like cash, checking and savings account balances, and investments that can be readily converted into cash with little to no impact on their value. This would include stocks, bonds, or mutual funds. Add up the total value of these assets.

Step Two: Figure Out Your Liabilities

Liabilities include all the money that you owe. Consider your mortgage, car loans, student loans, credit card debt, and other outstanding debts. Sum up these debts to calculate your total liabilities.

Step Three: Subtract Liabilities from Liquid Assets

Once you have your total for liquid assets and liabilities, you subtract the following: Total liquid assets – Total liabilities = Liquid net worth.

Suppose the result is a positive number, great! That’s how much cash you could potentially have if you liquidated all those assets today and paid off your debts. If it’s negative—don’t panic—it merely signifies that your debts currently outweigh your liquid assets.

Net Worth Vs. Liquid Net Worth

In personal finance, net and liquid net worth might seem very similar, but they do serve different purposes. Your net worth is the total of what you own (assets) minus what you owe (liabilities). It includes all your property - from real estate and cars to stocks, bonds, and cash.

Conversely, your liquid net worth narrows it down to focus on what can be quickly and easily converted into cash. Less liquid assets like real estate or a fine art collection don't typically count here. Liquid net worth offers a more realistic picture of your financial health in an emergency.

Research suggests that many Americans carry more debt than assets. So, while someone might have a high net worth due to property assets or business interests, their liquid net worth could be significantly lower due to mortgages or business loans.

Understanding these terms is crucial as they reflect different aspects of your financial situation. High net worth does not necessarily mean high liquidity, vital for short-term financial stability and flexibility.

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What is the average liquid net worth by age?

So, you're curious about the average liquid net worth by age? Let's break it down.

Under 35 years old: The average liquid net worth is around $76,000. Remember, these are just starting years; folks are typically beginning to build wealth.

From 35 to 44 years old typically occurs when careers take off and earnings increase significantly. The average liquid net worth is nearly six times over $436,000.

From 45 to 54 years old: Here we see another giant leap. The average liquid net worth at this stage is approximately $834,000. This level continues to rise for those aged 55 to 64, with an average figure of around $1,176,000.

These averages might seem overwhelming or out of reach, but don't get disheartened. Everyone has a unique financial journey influenced by various factors such as income, expenses, saving habits, etc.

5 Tips for Improving Liquid Net Worth

5 Tips for Improving Liquid Net Worth

Your liquid net worth gives you vital information about your financial standing. Think of it as a snapshot of your current financial health from a liquidity perspective. If you've calculated yours and feel the urge to boost it, here are some tips that may help.

Reduce High-interest Debt

Reducing high-interest debt is crucial when attempting to enhance your liquid net worth. Unfortunately, debts like credit card balances and payday loans often come with exorbitant interest rates.

These lending options can quickly create a vicious cycle of debt that is difficult to escape.

Think about this: for every dollar of debt incurred with a high-interest rate, you'll pay significantly more than that dollar back over time. This is precious money that could have instead increased your liquidity. Thus, tackling these high-interest liabilities should be a top priority in your financial game plan.

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Increase Savings And Emergency Funds

Having a considerable amount saved can significantly boost your liquid net worth. A savings account adds to your total assets and improves liquidity since bank savings can be easily converted into cash.

Maintaining an emergency fund is a financial security net when unexpected expenses arise. It brings flexibility and peace of mind, knowing that unplanned costs won't throw you off-course or force you into debt. Aim for enough funds to cover three to six months' living expenses.

Consider setting regular automatic transfers from your checking account into savings or emergency fund accounts for effective saving habits.

Diversify Investments In Liquid Assets

Diversification is key when aiming to improve your liquid net worth. Are you wondering what exactly this means? Simply put, it means spreading your investments across various types of assets, which helps lower the overall risk of your investment portfolio.

The goal is to invest in multiple sectors or industries. This way, even if one sector crashes or performs poorly, your other investments can help cushion the blow.

Perhaps you've heard the old saying, "Don't put all your eggs in one basket." The same principle applies here. Consider a mix of stocks, mutual funds, treasury bills, or money market securities. These investments are typically easier to convert into cash quickly without significant value loss.

Limit Large, Illiquid Purchases

While having a beautiful large home or fancy car might enhance your lifestyle and raise eyebrows at social gatherings, these large and illiquid assets can tie up a significant portion of your wealth and limit your financial liquidity.

You might want to consider it before making such large purchases. An illiquid asset takes time to sell and may not retain its value on sale, especially during economic downturns or emergencies when you need cash swiftly.

So, although that grand piano or luxury yacht might seem enticing now, consider how it will affect your bottom line. Remember: a controlled approach towards spending on these large items could dramatically improve your liquid net worth over time.

Regularly Review and Adjust Your Financial Portfolio

One meaningful strategy to improve your liquid net worth is regular assessment and adjustment of your financial assets. Consistently keep track of where your money is invested. You want to ensure that a significant portion stays in easily accessible, liquid assets.

However, you don't want to get overwhelmed by the terminology! Here's what it means in straightforward terms - always ensure some of your savings are in places where you can quickly retrieve them. This might include traditional savings accounts or conservative investment options like certificates of deposit.

Also Read: 3 Fund Portfolio In 2023 [Diversify Your Investment]

FAQs About Liquid Net Worth

What is liquid net worth?

Liquid net worth is the value of your assets that can be easily converted into cash without losing much of their value.

How is liquid net worth calculated?

Liquid net worth is calculated by adding up all your liquid assets (like cash and stocks) and subtracting your liabilities.

Why is understanding liquid net worth important?

It gives you a clear picture of how much money you have available in case of emergencies or unexpected expenses.

Are all assets considered liquid?

No, only those quickly converted into cash, such as savings accounts, stocks, and bonds, are considered liquid assets.

Is property considered as part of my liquid net worth?

No, Property such as homes or cars is not typically included in your liquid net worth because it can take time to convert them into cash.

How often should I calculate my liquid net worth?

There isn't a specific timeline, but it's a good practice to assess it regularly, especially if there have been significant changes in your financial situation.


In conclusion, liquid net worth is vital to your financial status. Unlike simple net worth, it emphasizes financial flexibility and resilience against unforeseen circumstances.

It's crucial to regularly calculate and boost your liquid net worth, focusing on reducing high-interest debts, growing emergency funds and savings, investing smartly in liquid assets, limiting large illiquid purchases, and regularly reassessing your financial portfolio.

Enhancing your liquid net worth leads to a stronger financial foundation and promotes wealth accumulation efficiently.

Michael Restiano

I lead product content strategy for SaltMoney. Additionally, I’m helping our broader team of 4 evolve into a mature content strategy practice with the right documentation and processes to deliver quality work. Prior to Instacart, I was a content strategy lead at Uber Eats and Facebook. Before that, I was a content strategist at SapientNitro, helping major Fortune 500 brands create better, more useful digital content.