What Is the Net Worth Formula
Net worth equals total assets minus total liabilities. Assets include cash, investments, real estate, and personal property. Liabilities include loans, credit card balances, and mortgages. The result shows the value left after paying off all debts.
How to Calculate Net Worth
List every asset at its current market value. Then list every liability at the outstanding balance. Subtract total liabilities from total assets to get your net worth. Update the numbers regularly to track progress over time.
Why Net Worth Matters
Net worth provides a clear snapshot of your overall financial position. A rising net worth usually means you are building wealth, while a falling figure may signal financial pressure. It helps compare your standing against benchmarks and plan long-term goals.
For more details on assets, liabilities, and financial measurement, see the Investopedia net worth definition.
