What Is Net Worth
Net worth is the difference between your total assets and total liabilities. Assets include cash, investments, real estate, and valuables. Liabilities include loans, credit card balances, and mortgages.
How to Calculate Net Worth
To calculate net worth, list all your assets and assign each a current market value. Next, list all your debts. Subtract total liabilities from total assets. The result is your net worth. You can update this calculation regularly to track progress.
Why Net Worth Matters
Net worth provides a clear snapshot of your financial position. It helps you see whether you are building wealth or accumulating debt. Many financial advisors use net worth as a key measure of long-term financial health.
For more guidance on tracking assets and liabilities, see the Investopedia Net Worth definition.
