What Net Worth Means
Net worth is the difference between what you own and what you owe. It equals total assets minus total liabilities. A positive number means assets exceed debts, while a negative number means debts are larger than assets.
Where Net Worth Comes From
Net worth comes from income, savings, investments, property, and business ownership. Income from employment or business can be saved or invested to build assets over time. Real estate, stocks, bonds, retirement accounts, and business equity are common sources of wealth. Liabilities such as mortgages, loans, and credit card balances reduce net worth.
How Net Worth Grows
Net worth grows when asset values increase, debts decrease, or new savings and investments are added. Compound returns, consistent contributions, and diversified holdings help wealth accumulate. For a detailed breakdown of the main components, see the SEC guide on calculating net worth.
