What is Net Worth?

Net worth is the total value of everything you own (your assets) minus everything you owe (your liabilities). It provides a snapshot of your overall financial health and helps you understand your current financial position.

Net Worth = Total Assets − Total Liabilities

Examples of assets include:

• Cash and savings
• Checking accounts
• Investments (stocks, bonds, mutual funds)
• Retirement accounts
• Real estate
• Vehicles
• Valuable personal belongings

Examples of liabilities include:

• Mortgage balance
• Student loans
• Car loans
• Credit card debt
• Personal loans
• Other outstanding debts

Example Calculation

Suppose you have:

Savings: $20,000
Investments: $35,000
Home equity: $150,000
Car: $15,000

Total Assets: $220,000

And you owe:

• Mortgage: $120,000
• Car loan: $8,000
• Credit card debt: $2,000

Total Liabilities: $130,000

Net Worth = $220,000 − $130,000 = $90,000

A positive net worth means your assets are worth more than your debts. A negative net worth means your liabilities exceed your assets, indicating there is more debt than owned value.

Tracking your net worth regularly can help you measure financial progress, set realistic goals, and make informed decisions about saving, investing, and debt repayment.