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It's probably some where between the end of your ribcage and the top curve of your hip bone. Depending on what body shape you are, you may have a very defined natural waist (hourglass) or maybe you only have to eyeball it (rectangle).
In the garment-sewing world, the advice is usually to tie a length of narrow elastic around your waist and then bend sideways a few times (both sides) to let it settle. Where the elastic settles is your natural waist. Typically much higher than most people think (or would wear pants).
Alexandra, that elastic idea is genius! That would totally work.
I had always understood the waist to be the narrowest point on your torso -- which, yes, as Alexandra says, is usually pretty high up. Above the bellybutton, for sure.
Using the bend to the side rule, my natural waist is high -- like under my last rib kind of high. I have to wear super long skirts in order for them to stay in place (and not look trashy!).