What Net Worth Means
Net worth is the amount of wealth you have before paying all your outstanding debts. It equals your total assets minus your total liabilities. A positive result means you own more than you owe, while a negative result means your debts exceed your assets.
How to Calculate Net Worth
List everything you own, such as cash, investments, real estate, and vehicles. Then list what you owe, including mortgages, loans, and credit card balances. Subtract total liabilities from total assets to find your net worth. You can track your progress using free online tools and templates.
Why Net Worth Matters
Net worth gives a clear snapshot of your financial position. It helps you compare your wealth over time and set realistic goals. Lenders and advisors often use it to evaluate financial health. For more details on how net worth is calculated, see the Investopedia explanation of net worth.
