What Does Net Worth Mean
Net worth is the total value of your assets minus your liabilities. Assets include cash, investments, real estate, and retirement accounts. Liabilities include mortgages, loans, and credit card balances. A positive net worth means your assets exceed your debts.
How to Calculate Your Net Worth
List all of your current assets and their market values. Then list all outstanding debts and obligations. Subtract total liabilities from total assets to get your net worth. You can use a simple spreadsheet or a financial calculator to track these figures over time.
Common Thresholds for Defining Wealth
Financial institutions and researchers use different benchmarks to classify wealth. According to the Federal Reserve, the top ten percent of U.S. households hold a large share of aggregate wealth. The Federal Reserve Board publishes detailed data on household wealth distribution at https://www.federalreserve.gov/econres/wealth-equity-and-the-wealthy.htm. Being "rich" often depends on your location, lifestyle, and financial goals.
