What Is Net Worth?
Net worth is the total value of everything a person owns minus everything they owe. It is a single number that shows financial position at a specific point in time.
How Net Worth Is Calculated
To calculate net worth, add up assets such as cash, investments, real estate, and retirement accounts. Then subtract all liabilities, including mortgages, loans, and credit card balances. The result is the net worth figure.
Why Net Worth Matters
Net worth helps track wealth over time and compare financial progress across income levels. It is used by lenders, advisors, and researchers to understand household financial health. For more detail, see the Investopedia definition of net worth.
