What is Net Worth?
Your net worth is the value of everything you own (your assets) minus everything you owe (your liabilities). It provides a snapshot of your financial position at a specific point in time. Tracking your net worth over time is a great way to measure your financial progress.
Net Worth = Total Assets − Total Liabilities
Assets (What you Own)
Liabilities (What you Owe)
Your Financial Snapshot
Assets vs Liabilities
Interpreting Your Net Worth
Positive Net Worth
Congratulations! This means your assets outweigh your liabilities. A higher positive net worth generally indicates better financial health. Focus on increasing assets (investing, saving) and reducing high-interest liabilities.
Negative Net Worth
This means your liabilities are greater than your assets. While common early in life (due to student loans or mortgages), it's important to have a plan to address it. Focus on paying down high-interest debt and gradually building assets.
Tracking is Key
Your net worth isn't static. Calculate it periodically (e.g., annually or semi-annually) to track your progress towards your financial goals. Look for trends – is your net worth growing over time?