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. The result shows your overall financial position at a specific point in time.
How Net Worth Is Calculated
To calculate net worth, subtract all liabilities from all assets. For example, if your assets total $500,000 and your liabilities total $300,000, your net worth is $200,000. A positive number means you have more assets than debts, while a negative number indicates the opposite.
Why Net Worth Matters
Net worth provides a clear snapshot of your financial health beyond income alone. It helps track wealth over time and compare financial progress across different life stages. For more details on personal finance metrics, see Investopedia.
