What Is Net Worth
Net worth is the difference between what you own and what you owe. It is a single number that summarizes your overall financial position at a specific point in time.
How to Calculate Net Worth
To calculate net worth, add up the value of all your assets, such as cash, investments, real estate, and retirement accounts. Then subtract all your liabilities, including mortgages, loans, and credit card balances. The result is your net worth.
Why Net Worth Matters
Tracking net worth helps you measure financial progress over time. A growing net worth generally indicates that you are building wealth, while a declining net worth may signal the need to reduce debt or increase savings. For a detailed breakdown of assets and liabilities, you can refer to the Consumer Financial Protection Bureau guide on calculating net worth.
