Net Worth

Net worth is the single clearest snapshot of financial position: add up what you own, subtract what you owe, and the difference is your net worth. Assets include bank and brokerage balances, retirement accounts, and the value of a home, car, or business. Liabilities are the debts against those, from a mortgage to a credit card balance. Because it nets debt against assets, a large paper value (a pricey house) can still leave a modest net worth if it carries a large loan.

Net worth is often negative early on, when student loans or a new mortgage outweigh savings, and it normally climbs with age as debts are paid down and investments compound. Tracking it over time matters more than any single reading, because the trend shows whether your finances are moving in the right direction. It is also the figure behind wealth comparisons such as the Survey of Consumer Finances percentile tables.