What Net Worth Means
A person's net worth is the difference between everything they own and everything they owe. It is a single number that summarizes overall financial position at a specific point in time.
How Net Worth Is Computed
Net worth is computed by adding the market value of assets such as cash, investments, real estate, and personal property, then subtracting all liabilities like mortgages, loans, and credit card balances. The result can be positive, zero, or negative.
Why Net Worth Matters
Tracking net worth helps individuals measure wealth over time, evaluate financial progress, and compare their standing with benchmarks. For more detail on how net worth is calculated and interpreted, see the Investopedia guide on net worth.
