What Net Worth Means
Net worth is a snapshot of your financial position. It equals your total assets minus your total liabilities. A positive number means you own more than you owe; a negative number means the opposite.
How to Calculate Net Worth
To calculate your net worth, subtract your total debt from your total assets. List everything you own, such as cash, investments, retirement accounts, and property, then add the values. Next, list all debts, including loans, credit cards, and mortgages, and sum them. Finally, subtract the total debt from the total assets.
Why Tracking Net Worth Matters
Tracking net worth over time shows whether your finances are improving or declining. It helps you spot trends, set goals, and make better decisions about saving, investing, and borrowing. For more details, see the Investopedia guide on net worth.
