What Is Net Worth?
Net worth is the difference between total assets and total liabilities. Assets include cash, investments, real estate, and valuables. Liabilities include loans, mortgages, credit card balances, and other debts. The result shows financial position at a point in time.
How Net Worth Is Calculated
To calculate net worth, list all assets and estimate their current market value. Then list all liabilities and their outstanding balances. Subtract total liabilities from total assets. A positive number means assets exceed debts, while a negative number means debts outweigh assets.
Why Net Worth Matters
Net worth provides a clear snapshot of financial health. It helps track progress over time, compare financial positions, and set realistic goals. Lenders and financial planners often use it to assess stability and risk.
For more details on calculating and improving net worth, visit Investopedia Net Worth.
