What Net Worth Means
Net worth is the difference between everything you own and everything you owe. A positive number means assets exceed liabilities, while a negative number means debts are larger than assets. It is a standard snapshot of financial position used by individuals and institutions.
How to Calculate Net Worth
Start by listing all assets, such as cash, bank accounts, investments, retirement accounts, real estate, and vehicles. Use current market values, not purchase prices. Next, list all liabilities, including mortgage balances, credit card debt, student loans, and other loans. Subtract total liabilities from total assets. The result is your net worth.
Why Tracking Net Worth Matters
Tracking net worth over time helps you see whether your financial position is improving or declining. It can guide decisions about saving, investing, and debt repayment. For more details on assets and liabilities, see the Consumer Financial Protection Bureau net worth calculator.
