What Does Net Worth Mean?
Net worth is the difference between everything you own and everything you owe. It is a single number that summarizes your financial position at a specific point in time.
How Net Worth Is Calculated
To calculate net worth, add up the value of your assets, such as cash, investments, property, and retirement accounts. Then subtract all liabilities, including loans, credit card balances, and mortgages. The result is your net worth.
Why Net Worth Matters
Net worth helps you measure wealth over time. A rising net worth usually means you are saving and reducing debt, while a falling net worth can signal financial stress. For more detail on how net worth is used in personal finance, see Investopedia.
