net worth

Net Worth is the value of the assets you own (the cash in your wallet, your 401(k), your car or home) minus the value of the liabilities you owe (the debt from your credit card, student loans, or mortgage). If you used all your assets to pay off all your liabilities, what you have left over is your net worth. It could be positive or negative depending on your individual situation and where you are in your career. Net worth is a simple way to measure your financial progress; is it increasing or decreasing? If you’re saving money and your investments are growing, your net worth is increasing. If you’re spending more every month than you’re earning, then your net worth is decreasing. Because net worth is a simple summary of your entire financial picture it’s a good (but not perfect) measure for understanding your financial situation at a glance.