What Net Worth Means
Net worth is the value of everything you own minus everything you owe. Assets include cash, investments, and property; liabilities include loans and credit card balances. A positive net worth means your assets exceed your debts.
What Is Considered a Good Net Worth
A good net worth depends on age, income, and lifestyle. Common benchmarks suggest aiming for a net worth equal to your annual income by age 30, three times your income by 40, and five times by 50. For many households, a net worth above the median for their age group is a practical target.
How to Build a Strong Net Worth
Focus on increasing income, reducing high interest debt, and saving consistently. Invest early in diversified accounts, and protect your wealth with adequate insurance. Track your net worth regularly using a simple balance sheet or a reputable financial tool.
For more on how net worth is calculated, visit the Investopedia Net Worth Guide.
