What Is Net Worth?
Net worth is the difference between everything you own and everything you owe. It is calculated by subtracting your total liabilities from your total assets. A positive net worth means your assets exceed your debts, while a negative net worth means the opposite.
How to Calculate Your Net Worth
Start by listing all your assets, such as cash, savings, investments, retirement accounts, and property. Then list all your liabilities, including credit card balances, loans, and mortgages. Subtract your total liabilities from your total assets. The result is your net worth. You can use a simple spreadsheet or a financial tool to track these numbers over time.
Why Tracking Net Worth Matters
Tracking net worth gives a clear picture of your overall financial health. It helps you see whether you are building wealth or taking on too much debt. Regularly reviewing your net worth can guide better spending, saving, and investing decisions. For more details on personal finance basics, visit Investopedia.
