What Is Net Worth
Net worth is the difference between everything you own and everything you owe. It is a single number that shows your financial position at a specific point in time. A positive net worth means assets exceed liabilities, while a negative net worth means debts are larger than assets.
How to Calculate Net Worth
List all your assets, such as cash, investments, real estate, and retirement accounts. Then list all your liabilities, such as mortgages, loans, and credit card balances. Subtract total liabilities from total assets to get your net worth. You can use online calculators or spreadsheet templates to track this over time.
Why Net Worth Matters
Net worth gives a clearer picture of financial health than income alone. It helps you measure progress, set goals, and compare your position against benchmarks. Tracking net worth regularly can reveal whether you are building wealth or accumulating debt.
