Net Worth

Net worth is a measure of an individual’s financial health, calculated by subtracting total liabilities from total assets. In simpler terms, it’s what you own versus what you owe. For example, if someone has assets like cash, property, and investments totaling $200,000, but they also have debts such as a mortgage, student loans, and credit card balances amounting to $100,000, their net worth would be $100,000. This figure can provide insights into one's financial standing and is crucial for personal financial planning. It helps individuals track their progress over time, set financial goals, and assess their ability to weather economic fluctuations.  Contrary to what many could think, net worth isn't just the amount of cash someone has in their bank account. The worth of all your assets makes up your net worth, like the cost of the house you live in and the phone in your pocket. Understanding net worth is fundamental not only for personal finance but also for broader economic discussions, as it reflects the overall wealth distribution within society.