What Is Net Worth
Net worth is the difference between your total assets and total liabilities. Assets include cash, investments, real estate, and personal property. Liabilities include mortgages, loans, and credit card balances.
How to Calculate Net Worth
List all assets at current market value, then subtract all debts. A positive net worth means assets exceed liabilities, while a negative net worth means debts are larger than assets.
Why Net Worth Matters
Net worth provides a clear snapshot of financial health. It helps track progress over time and compare financial standing across different income levels. Many financial planners use net worth as a key indicator of wealth.
For more details on how assets and liabilities are valued, see the Investopedia net worth definition.
