What Is Net Worth?
Net worth is the difference between total assets and total liabilities. It measures personal or business financial health at a specific point in time. A positive net worth means assets exceed liabilities, while a negative net worth means debts outweigh assets.
Assets vs. Liabilities
Assets are resources that hold or generate value, such as cash, investments, real estate, and retirement accounts. Liabilities are financial obligations, including mortgages, student loans, credit card balances, and auto loans. Tracking both categories helps clarify overall financial position.
How to Calculate Net Worth
List all assets and assign current market values, then list all liabilities with outstanding balances. Subtract total liabilities from total assets to find net worth. Revisit the calculation regularly to monitor progress and adjust financial plans accordingly. For more details, see the Investopedia guide on net worth.
