What Net Worth Means
Net worth is the difference between your total assets and total liabilities. It shows your financial position at a specific point in time. Positive net worth means assets exceed liabilities; negative means the opposite.
How Cash Inflows Affect Net Worth
Cash inflows include income, investment returns, and other money received. They increase assets or reduce liabilities, which can raise net worth. To see the impact, record each inflow and assign it to the correct account, such as cash, investments, or debt payments.
Simple Calculation Steps
List all assets, then list all liabilities. Subtract total liabilities from total assets to get net worth. Add cash inflows for the period to the asset side, and subtract any cash outflows used to pay down debt. For more detail on cash flow, see the Investopedia cash flow guide.
