What Net Worth Means
Net worth is the difference between what you own and what you owe. It is a single number that summarizes your overall financial position at a specific point in time.
How Net Worth Is Calculated
To calculate net worth, add up the market value of all assets, such as cash, investments, real estate, and retirement accounts. Then subtract all liabilities, including mortgages, loans, and credit card balances. The result is your net worth.
Why Net Worth Matters
Net worth helps track financial progress over time. A rising net worth usually means you are building wealth, while a falling net worth may signal debt or asset losses. For more detail on the calculation, see Investopedia.
